Foreign Income & Gains and tax year end: what the new UK regime means for you

The first tax year end is fast approaching under the new Foreign Income & Gains (FIG) regime, marking a significant shift for internationally mobile individuals coming to the UK.

For those who qualify, FIG offers a far simpler and more predictable alternative to the old remittance basis. But, as with any new tax regulations, the detail matters.

To benefit, you must not have been UK tax resident in the 10 tax years prior to becoming UK resident (whether returning or arriving for the first time). If eligible, you can elect into the FIG regime for your first four years of UK residence.

There is a clear advantage for doing so: foreign income and gains can be brought into the UK without further UK tax for those first four years.

However, unlike the remittance basis, individuals must report all relevant income and gains on their UK tax return in order to claim the relief. This introduces a new layer of complexity and reporting that should not be overlooked.

FIG risks

One of the key risks under the FIG regime lies in how income and gains are calculated across different jurisdictions.

Take the US as an example. Rental profits are calculated differently in both jurisdictions as the US allows for depreciation on the capital value of the property purchase as a deduction, whereas the UK does not. It is therefore important to calculate the reporting income under UK law to claim the correct relief under FIG.

Similarly, the US calculates capital gains on shares using a different method to the UK, which could again mean gains are calculated incorrectly. If they are, then the relief would be claimed incorrectly.

Figures taken from overseas tax returns may be incorrect for UK tax reporting, potentially making the entire FIG regime invalid and leaving all foreign gains liable for UK tax.

Planning ahead

For individuals newly arrived in the UK – or planning a move – the FIG regime requires early, proactive advice to ensure everything is structured and reported correctly from the outset.

Kreston Reeves works with internationally mobile individuals to: 

• Assess eligibility for the FIG regime. 
• Translate foreign income and gains for UK tax reporting. 
• Ensure accurate reporting and claims. 
• Provide confidence that relief is secured.

The FIG regime may be simpler, but it is not automatically applied. If you are moving or have recently returned to the UK, the Kreston Reeves team can help navigate the rules with complexity and confidence.