A Significant Shift in UK Tax Policy

April 2025 marks one of the most substantial changes to UK international tax rules in recent decades. The Foreign Income and Gains (FIG) regime has replaced the previous non-domicile (non-dom) framework, which had governed how certain UK residents were taxed on income and gains arising outside the United Kingdom. For individuals affected — including many expats, internationally mobile professionals, and business owners with cross-border interests — understanding the new rules is essential.

This article sets out the core features of the FIG regime, who it applies to, and the planning considerations that are now coming into focus. It does not constitute personalised financial or tax advice; we strongly recommend speaking with a qualified adviser about your individual circumstances.

Why the Non-Dom System Was Reformed

The previous non-domicile framework allowed eligible UK residents to elect to be taxed on a remittance basis — meaning foreign income and gains were only subject to UK tax when brought into, or used within, the UK. While that system served a particular policy purpose for many years, it attracted considerable criticism over fairness and complexity. The government concluded that a residence-based approach would be more consistent, more transparent, and better aligned with international norms.

The result is the FIG regime: a time-limited relief tied to residence history rather than the concept of domicile.

How the Foreign Income and Gains Regime Works

The Core Principle

Under the FIG regime, individuals who are new to UK tax residence may be eligible to receive relief on qualifying foreign income and gains for a fixed period. During this window, eligible foreign income and gains are not subject to UK tax, regardless of whether funds are remitted to the UK. This is a meaningful departure from the old remittance basis, which required careful management of how and when overseas funds were brought into the country.

The Qualifying Period

Eligibility is tied to an individual's residence history. To qualify, a person must not have been UK tax resident for a defined period prior to their arrival — meaning genuinely new or returning residents who have spent sufficient time abroad may be able to access the relief. The relief itself applies for a fixed term from the point an individual becomes UK tax resident, after which their worldwide income and gains become fully subject to UK taxation in the normal way.

It is important to note that eligibility criteria and the precise scope of qualifying income and gains should be assessed carefully. The rules carry specific technical conditions, and whether an individual qualifies — and for how long — will depend on their personal residence history and circumstances.

Remittance: No Longer the Central Concern

One of the most practically significant changes is that, during the eligible period, there is no requirement to track remittances of qualifying foreign income and gains. Individuals are free to bring funds to the UK without triggering a tax charge on those amounts, provided they fall within the relief. This removes a layer of administrative complexity that many non-dom clients previously had to manage with great care.

Transitional Arrangements

HMRC has put in place transitional provisions for individuals who were using the remittance basis under the old non-dom rules. These provisions are intended to give affected individuals an opportunity to restructure arrangements and, in certain cases, to benefit from preferential treatment on previously unremitted foreign income and gains that are brought to the UK within a set timeframe.

The details of these transitional measures are specific and time-sensitive. Individuals who were claiming the remittance basis before April 2025 should seek professional advice promptly to understand what options remain available to them and by when decisions need to be made.

Inheritance Tax Considerations

The reforms extend beyond income tax and capital gains tax. The government has also announced changes to the inheritance tax treatment of non-UK assets, moving away from the domicile-based framework that previously determined whether overseas assets fell within the scope of UK inheritance tax. The shift towards a residence-based approach for inheritance tax purposes adds another dimension to planning, particularly for individuals with significant overseas assets or complex family structures.

Given the interaction between income tax, capital gains tax, and inheritance tax under the new framework, holistic planning is more important than ever.

Key Planning Considerations

The introduction of the FIG regime raises a number of practical questions for individuals and their advisers. Relevant areas to review include:

  • Residence history and eligibility: Establishing whether an individual qualifies for the FIG relief, and for how long, requires a careful review of their UK and overseas residence record.
  • Transitional relief: For former non-dom clients, understanding the transitional provisions and acting within any applicable windows is a priority.
  • Asset and income structuring: The removal of remittance-basis planning does not eliminate the need for thoughtful structuring of overseas income and assets — it simply changes the framework within which that structuring takes place.
  • Trust and offshore structure reviews: The FIG regime includes specific rules relating to trusts and offshore structures. Existing arrangements should be reviewed to ensure they remain appropriate and compliant.
  • Inheritance tax exposure: Individuals with overseas assets should assess their inheritance tax position in light of the new residence-based approach.
  • Reporting obligations: While the remittance tracking burden may reduce for eligible individuals, there remain reporting requirements that must be met. Compliance should not be overlooked.

What This Means for Expats and Internationally Mobile Individuals

For expats living in the UK, and for internationally mobile professionals considering a move here, the FIG regime changes the tax calculus in important ways. On one hand, the ability to receive foreign income and gains free of UK tax during the qualifying period — without the administrative burden of remittance tracking — may make UK residence more straightforward for some. On the other hand, the time-limited nature of the relief means that longer-term planning cannot be deferred indefinitely.

Individuals approaching the end of their eligible period will need to consider how their affairs are structured as they transition to full worldwide taxation. Equally, those considering relocating to or from the UK should factor the new regime into their decision-making well in advance.

Next Steps

The Foreign Income and Gains regime represents a fundamental change in approach, and its implications will vary considerably depending on individual circumstances. Whether you are newly resident in the UK, a long-standing non-dom client adjusting to the new landscape, or a business with internationally mobile employees, there are likely to be matters worth reviewing.

At Xcelentra Financial Services, our advisers work with individuals and businesses navigating cross-border tax matters across the UK and Europe. If you have questions about how the FIG regime applies to your situation, we encourage you to get in touch to arrange a consultation.

Our work is supported by intelligent operational tools that help us research, organise, and prepare material efficiently — but every piece of advice and every client outcome is reviewed and owned by our professional team. That is what responsible practice looks like at Xcelentra.