On 6 April 2025, the UK tax landscape changes as the Foreign Income and Gains (FIG) regime replaces the remittance basis for non-UK domiciled individuals (non-doms). This marks the end of decades of tax efficiency where non-doms could keep foreign income and gains out of the UK tax net simply by leaving them offshore.
What Is FIG?
To qualify for FIG, a new arrival must be:
- UK resident in the tax year.
- Non-UK resident for the previous 10 consecutive tax years.
Foreign Income and Gains provides relief from UK tax on foreign income and gains for the first four tax years of UK residence, even if remitted to the UK. This makes it especially beneficial for those coming to the UK on work contracts, as non-UK investments can be enjoyed tax-free for that period.
What Happens After Four Years?
Once the initial relief period ends, FIG brings worldwide income and gains into the UK tax net, regardless of remittance. This shifts the focus to full UK tax exposure, making many traditional tax planning strategies obsolete.
Key Implications:
- Wealth Structures Under Threat: Trusts and offshore arrangements face increased scrutiny and potential tax liabilities.
- Complex Transitional Rules: Limited reliefs exist, but they are narrow and complex, demanding early planning.
- Tougher HMRC Scrutiny: High-net-worth individuals and complex offshore setups are likely targets.
Plan Ahead:
Proactive planning is essential to adapt to FIG, as retrospective strategies will not work. This new regime requires transparent and robust tax planning to mitigate risks and navigate the changing landscape.
Would you like help reviewing specific planning strategies or analysing the impact on a particular structure?
For more information or to book a consultation, contact our Senior Tax Consultant Nick Farmer on 01905 777600 or email nickfarmer@ormerodrutter.co.uk
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