Navigating the UK’s new FIG regime: what global employers and assignees need to know

The UK’s Foreign Income and Gains Regime

In April 2025, the UK introduced the Foreign Income and Gains (FIG) regime, replacing the long-standing remittance basis for taxing foreign income. This marks a fundamental shift from domicile-based to residence-based taxation, affecting internationally mobile employees, returning UK citizens, and globally mobile private clients alike. The reform aims to modernise the UK’s approach to international taxation, streamline compliance, and encourage transparency, but it also brings complexity. Employers with globally mobile staff must prepare for changes in payroll, tax planning and employee relocation, while individuals face new rules governing income relief, offshore assets, and inheritance tax exposure.

Who qualifies for the FIG Regime?

Eligibility requires meeting these two primary conditions:

• An individual must become UK tax resident following at least 10 consecutive years of non-residence prior to arrival.
• FIG relief applies for four tax years, beginning from the year UK residency is established. This regime is accessible to both UK-domiciled and non-UK-domiciled individuals. 

Notably, anyone already UK resident as of 6 April 2025, but for less than four consecutive tax years, may claim relief for the balance of those four years.

Key features and changes

• 100% relief: Foreign income and gains are fully relieved from UK taxation during the eligible four-year period, irrespective of whether they are remitted to the UK. This eliminates the previous need for segregated offshore accounts, simplifying compliance for new residents.
• After four years: Worldwide income and gains become taxable, ending all special relief. This change shortens the period of favourable treatment compared to the 15-year window under the old remittance basis.
• Annual claims: Relief must be claimed in each tax year within a self-assessment tax return. Each source of income or gains for which relief is sought must be specified.
• Loss of allowances: Making a claim for the FIG regime means forfeiting entitlement to the UK personal allowance, capital gains tax annual exemption, and certain other relief for that tax year.

Transitional provisions and special facilities

• Temporary Repatriation Facility (TRF): For those who accrued income or gains under the previous remittance basis, a special facility is available for three years from April 2025 to remit such funds to the UK at a reduced flat tax rate (12% for two years, 15% in the third year). This is designed to encourage the repatriation of historic foreign income.
• Capital Gains Tax (CGT) rebasing: Some individuals may rebase the value of relevant foreign assets to their market value on 5 April 2017, offering tax efficiency on future disposals provided strict conditions are met.
• Changes for trusts: The protective features in settlor-interested trusts are removed, making many trust-held foreign assets subject to UK taxation for long-term residents. 

Overseas Workday Relief (OWR) enhancements

• OWR continues but is now limited to the four-year FIG window and capped at the lower of £300,000 or 30% of relevant employment income for each qualifying year. Importantly, there is no longer a remittance restriction for these earnings: they may be brought to the UK tax-free within the qualifying period.
• Section 690 claims for proportionate PAYE withholding have shifted to an annual online process, streamlining and modernizing administration for both employers and employees. 

Inheritance tax reform

From April 2025, a new residence-based test will also replace the previous domicile-based regime for inheritance tax (IHT). UK-sourced and foreign assets will enter the IHT net for anyone resident for at least 10 out of the last 20 years, with a “tail” period applying for 3–10 years after departure. 

Practical points and planning

• Each annual relief claim must be balanced against the potential loss of UK allowances. For some assignees or returning expatriates, full taxation of non-UK income may sometimes be preferable, especially with minimal foreign gains and access to the personal allowance.
• Review of all offshore structures, trust interests, and prior remittance activity is essential for anyone affected. Transitional relief, especially TRF and CGT rebasing, are generous but time-limited and must be actively claimed.
• Employers with internationally mobile staff should prepare now for payroll impacts, OWR annualisation, and the end of the remittance regime’s practical conveniences. 

The FIG regime marks a seismic shift for international workers, returning UK citizens, and private clients. Preparation, timely claims, and a proactive, case-by-case approach will be the key to navigating the new rules, minimising unexpected tax exposures, and exploiting valuable transitional options.

How Vistra can help

From immigration to individual income tax support, Vistra’s global mobility advisory team provides authoritative information and recommendations related to all aspects of global mobility. Whether you’re sending your first employee abroad or maintaining existing operations in multiple countries, we make sure you understand and fulfill your compliance obligations in all jurisdictions. 

Contact a member of the Vistra team today to learn how we can support your global mobility strategy.

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If you’d like to learn more about how the UK’s immigration reform changes impact employers, check out part one of this series.

About the authors 

Saul Howerton is Vice President and Global Head of People Advisory at Vistra. With over 20 years of experience in consulting, operations, and finance, he specializes in HR, global mobility, and back-office outsourcing. He helps high-growth companies streamline operations, structure entities, and expand internationally to drive sustainable growth.

Luigi Nicoletta is Director of Global Mobility Advisory at Vistra and a qualified international tax adviser (ADIT). With nearly 20 years of experience in international operations and corporate compliance, Luigi helps clients expand into new markets, manage cross-border expatriate assignments, and align global growth with regulatory and tax frameworks.