Foreign income and gains regime (tax years from 2025/26)

Overview

The new regime for foreign income and gains (also referred to as the FIG regime) applies from 6 April 2025 and replaces the remittance basis for non-domiciled taxpayers with a new set of rules based on residence. Domicile is no longer relevant when calculating a UK tax liability on income and gains arising from 6 April 2025. Instead, the new regime is available to qualifying new residents (see heading below) in respect of most foreign income and gains. 

From 6 April 2025 all UK resident taxpayers are taxed on their worldwide income and gains as they arise (referred to as the arising basis) regardless of whether they bring the foreign income or gain to the UK. However, if relief is claimed for any foreign income and / or gains under the new regime, no UK tax charge will arise on the relieved amounts, even if they are brought into the UK in the tax year in which they arise or at a later date. Note that the foreign income and gains regime applies to foreign income and gains only, so UK-sourced income and gains remain fully taxable in the UK, even if you make a claim under the regime. 

UK residents must report all their foreign and UK income and gains to HMRC. The only exception to this reporting requirement is where no UK tax is due on the foreign income or gain and the taxpayer is not otherwise required to file a self assessment tax return for the year. See under the heading Reporting foreign income and gains to HMRC below. 

Qualifying new residents

You can claim relief under the foreign income and gains regime for a tax year if:

• You are UK resident for that tax year, and
• You have not been UK resident under the statutory residence test in at least 10 consecutive tax years immediately before that tax year. For this purpose, split tax years and years in which you are dual resident but UK non-resident under the terms of a double tax agreement count as years of UK residence.

You can also claim relief for each of the following three tax years provided you are UK resident in each of these years. Tax relief under the foreign income and gains regime is therefore available for a maximum of four consecutive tax years immediately following a period of non-residence of at least 10 consecutive tax years.

If you leave the UK within the first four tax years of UK residency, you will only be able to claim relief under the foreign income and gains regime if you return to the UK and become UK resident again within that four year period. You will not be able to roll over any years in which you were not UK resident even though you did not claim the relief in those years. In order to qualify for the relief again, there would need to be at least 10 consecutive tax years in which you were UK non-resident before you next become UK resident.

Individuals who became resident in the UK prior to 6 April 2025 may still claim relief for tax years 2025/26 onwards, provided that the residence conditions are met. For example, a taxpayer who first becomes resident in the UK in 2022/23 (year one) will be eligible to claim the relief in 2025/26 (year four) if they are still resident in the UK in that year.

Members of the House of Commons and House of Lords are unable to claim relief under the foreign income and gains regime.

Reporting foreign income and gains to HMRC

If you are UK resident and you file a self assessment tax return, you will usually need to report all foreign income and gains on your self assessment tax return for the year, regardless of the amounts (there are some exceptions if you only have foreign gains and no UK capital gains tax to pay or if you have foreign dividend income only which is less than the £500 dividend allowance).

If you do not usually file a self assessment tax return, you will need to consider whether you owe UK tax on the foreign income or gains in the absence of a foreign income and gains claim or election. If you do, then you should usually register to file a self assessment tax return to report the income or gains and either pay the tax or make the claim. This is the case however small the tax liability on the income.

If you do not owe any UK tax on the foreign income or gains before considering a foreign income and gains claim or election, then you will not need to register for self assessment just to report the amounts (provided you have no other reason to file a return). This might apply if, for example, your worldwide income is within your UK personal allowance (and blind person’s allowance, if applicable).

Depending on the source of foreign income, it may be covered by allowances or nil rate bands. For example, for small amounts of foreign interest, remember the interest may be covered by the personal savings allowance or the starting rate for savings (you should add together your foreign interest and UK interest to determine if this is the case). Similarly, foreign dividends may be covered by the dividend allowance.

Small foreign gains may be covered by the capital gains tax annual exempt amount. 

Prior to 6 April 2025, non-domiciled taxpayers with less than £2,000 of unremitted foreign income and gains for a tax year would not need to report or pay UK tax on those amounts. This is because the remittance basis would apply automatically. This exception does not apply under the new foreign income and gains regime, therefore it is important that foreign income and gains are correctly identified and reported to HMRC as errors can cause unexpected UK tax charges to arise, as well as risking the possibility of punitive penalties for errors or omissions. 

The claims for relief under the foreign income and gains regime

Under the foreign income and gains regime, a qualifying new resident can make up to three separate possible claims:

1. A foreign income claim
2. A foreign employment claim and election (we cover this in our page on overseas workday relief)
3. A foreign gain claim

If you are a qualifying new resident in the UK (see above) for a tax year, you can choose to make any combination of the above claims or elections for that year (or none at all). However, making one or more of the claims in a tax year will mean that you are not entitled to all of the following for that year claim:

• The UK income tax personal allowance (and blind person’s allowance, if applicable)
• A tax reduction where the marriage allowance or married couple’s allowance has been claimed
• The capital gains tax annual exempt amount

In addition, claiming any one of the three claims or elections will mean that foreign income losses (for example, from a foreign trade or foreign property business) and foreign capital losses cannot be claimed for that year in connection with your UK tax position. Similarly, no relief will be available for interest and other finance costs which relate to overseas property letting income. 

If a UK resident does not claim tax relief for foreign income or gains arising from 6 April 2025 under the new regime, those amounts will be in the scope of UK tax just like UK income and gains. Where this is the case, double taxation relief should be considered to reduce any double taxation arising.

Making a claim for relief under the foreign income and gains regime

Each of the three possible claims under the foreign income and gains regime must be made in a self assessment tax return for the relevant year. In relation to foreign employment income, as well as making a claim for the amount of the relief, it is also necessary to make an election for the relief to apply, as we explain in our overseas workday relief guidance.

The deadline for each claim (and election, where applicable) is 31 January in the second tax year following the end of the tax year of the claim. For example, claims for the 2025/26 tax year (the year ended 5 April 2026) must be made by 31 January 2028.

Where a claim is made, you must identify on the return the income or gains which are being relieved from UK tax by virtue of the claim. These amounts are then deducted from the amounts charged to UK tax when your tax liability is calculated. This differs from the requirements for unremitted income and gains under the remittance basis, which in general did not need to be reported on a tax return.

These deductions do not affect the calculation of your adjusted net income – in other words, your foreign income is taken into account when calculating your adjusted net income, even if a foreign income relief claim is made. This means that any foreign income relief claimed under the foreign income and gains are disregarded for the purposes of calculating the income that is subject to the high income child benefit charge, for example. 

If income or gains are relieved from UK tax under the new regime, then it does not matter if or when the income or gains are brought into the UK – no UK tax charge will arise.

Cryptoassets under the foreign income and gains regime

In most cases, income and gains arising from cryptoassets to UK residents will be taxable in the UK. There are only limited circumstances under which income tax relief may be available in respect of income arising from cryptoassets – namely, when qualifying new residents are remunerated in cryptoassets for work duties performed outside of the UK. If you think this might apply to you, see our main guidance page on cryptoassets for further information, and consider seeking professional advice as this area can be complex.

More information

Further information on eligibility for relief under the foreign income and gains regime is available on GOV.UK.

Detailed information about the qualifying foreign income and gains for which relief can be claimed under the foreign income and gains regime can be found in HMRC’s technical manuals at GOV.UK (income) and GOV.UK (gains).

HMRC’s self assessment notes on GOV.UK provide further information on making a claim for UK tax relief on qualifying foreign income and gains.

The rules surrounding foreign income and gains regime can be very complex. If you are considering making a claim for relief, then we strongly recommend you seek professional advice.