Foreign Income & Gains (FIG) regime – Spring Budget 2024

Published by Tom Boniface on 6 March 2024

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The Chancellor announced the abolition of the current remittance basis regime, which will be replaced by the new FIG regime, applying from 6 April 2025.

This will apply to individuals who are in their first 4-years of UK tax residency where they have not been considered a UK tax resident at any point during the previous 10 tax years. 

The announcement states that any income received, or gains realised, in these qualifying 4 years can be used in the UK without any UK tax liability. As with the current remittance basis regime, the FIG regime is an annual claim through self-assessment, and the individual will lose their entitlement to their personal allowances and capital gains tax annual exemption. Furthermore, for individuals whose UK residency starts before 6 April 2025, they will be able to use the FIG regime for the remainder of those 4 years. 

Current remittance basis users

Taxpayers who currently claim the remittance basis and are not eligible for the FIG regime will, for the tax year ended 5 April 2026 pay tax on 50% of their foreign income. This reduction will not apply to capital gains. After 6 April 2026 they will be subject to tax on their worldwide income and gains. 

Temporary Repatriation Facility (TRF)

A new 12% rate of tax will apply for remittances of funds that have previously benefitted from the remittance basis regime, where those funds are remitted to the UK during the tax years ended 5 April 2026 and/or 5 April 2027. 

It has been announced that there will be some relaxation of the complex ‘mixed fund’ ordering rules to make it easier to access the 12% tax rate where identification rules are complex. It should be noted that after 6 April 2027 any remittances of pre-6 April 2025 funds protected by the remittance basis will be taxed at normal rates. 

Overseas Workday Relief (OWR)

OWR is enjoyed by a number of individuals who come to work in the UK, and also spend time working overseas. It does not appear there will be significant changes to these rules with the exception that one must qualify for the FIG regime to benefit from it. As such, those individuals who have been non-UK tax resident for fewer than 10 years before coming to the UK will not be able to make a claim under OWR. 

Capital gains tax rebasing

From 6 April 2025, an individual who is not eligible for, or later ceases to be eligible for the new 4-year FIG regime, will be subject to capital gains tax on non-UK disposals. As with the changes announced in 2017, there is an opportunity to rebase personally held foreign assets, with the valuation date being 5 April 2019. Unlike the previous measures, one must elect to rebase the asset, rather than it automatically applying. 

As it stands, it has been announced this rebasing will be available to individuals who have claimed the remittance basis are not considered to be UK domiciled or deemed UK domiciled by 5 April 2025. 

Whist the announced provisions are more restrictive for individuals who claim the remittance basis regime, there are still opportunities available to them to realise tax efficient funds for spending in the UK and in certain instances individuals may be able to bring more funds to the UK to meet their spending needs at a lower tax cost, this could be a welcome opportunity for some taxpayers. 

Watch our Spring Budget question time webinar

Following the Spring Budget, our panel of specialists examined the announcements made by The Chancellor, discussing what these changes mean for you. They also answered questions from our live audience. This webinar is now available to watch on demand here.

Alternatively, if you would like any further information or guidance on this topic, get in touch with your usual Kreston Reeves contact or contact us here.

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