The 4-Year Foreign Income and Gains Regime

If you've recently moved to the UK after living abroad for at least 10 years, you may be able to claim the 4-year foreign income and gains (FIG) regime. This regime allows you to avoid paying UK tax on certain foreign income and gains for up to four years, though you'll need to give up some tax allowances in return.

What is the 4-year foreign income and gains regime?

From 6 April 2025, the new 4-year FIG regime replaced the previous remittance basis system. If you qualify and make a claim, you won't pay UK tax on eligible foreign income and capital gains for up to four consecutive tax years.

This means if you sell foreign assets or earn income from overseas sources during this period, you can claim relief from UK tax on those amounts — potentially saving significant sums whilst you establish yourself in the UK.

Who can claim the regime?

To use the 4-year FIG regime, you must be a "qualifying resident". This means you need to meet two conditions:

First, you must be a UK tax resident under the statutory residence test (SRT). This test determines whether you're resident in England, Scotland, Wales or Northern Ireland for tax purposes.

Second, you must be within your first four years as a UK tax resident following at least 10 consecutive years as a non-UK tax resident.

The four-year period starts from the tax year when you first became UK tax resident, and runs for a maximum of four consecutive years from that point. You cannot carry forward any unused years to a later period.

If you became UK resident before 6 April 2025

If your four-year period started before the regime launched on 6 April 2025, you can only use it from the 2025/26 tax year onwards, and only for any qualifying years remaining in your four-year window.

For example: if you became UK tax resident on 6 May 2022 after 10 consecutive tax years abroad (from 5 August 2012 to 5 May 2022), your four-year period started in 2022/23. Because the regime only began in 2025/26, you would have just one year of eligibility — the 2025/26 tax year.

If you temporarily leave the UK

If you leave the UK temporarily during your four-year period and become a non-UK tax resident, you cannot claim the regime for the tax years when you were non-resident. However, you can claim it for any remaining qualifying years when you return to the UK as a tax resident.

For example: if you're eligible from 2025/26 onwards but become non-UK resident during 2027/28, then return in 2028/29, you can claim for three tax years: 2025/26, 2026/27, and 2028/29. You cannot claim for 2027/28 when you were temporarily abroad, and you cannot roll that year forward beyond your original four-year window.

What foreign income and gains qualify?

You can claim relief on several types of foreign income and gains, including:

• Profits from a trade carried on wholly outside the UK
• Profits from an overseas property business
• Dividends from non-UK resident companies
• Interest from foreign bank accounts
• Foreign capital gains (gains made when selling foreign assets)

Important exception: Foreign earnings from employment and foreign specific employment income do not qualify for this regime. However, you may be able to claim relief under the separate Overseas Workday Relief regime instead.

How to claim

You must claim the 4-year FIG regime on your Self Assessment tax return. If you're not already registered for Self Assessment, you'll need to register.

You have flexibility in how you claim: you can choose which specific foreign income and gains to claim relief on. You don't have to claim relief on all your foreign income sources if you don't want to.

The trade-off: allowances you'll lose

Whilst the regime offers valuable tax relief on foreign income and gains, there's a significant trade-off. If you make a claim, you'll lose access to:

• Your Income Tax personal allowance (£12,570 in 2025/26)
• Your Capital Gains Tax annual exempt amount (£3,000 in 2025/26)
• Married Couple's Allowance (if you're currently eligible)
• Marriage Allowance (if you're currently eligible)
• Blind Person's Allowance (if you're currently eligible)

You'll need to weigh up whether the tax relief on your foreign income and gains is worth more than these allowances. For someone with substantial foreign income or gains, the regime will likely be beneficial. For someone with modest foreign income, keeping your allowances may be the better choice.

Impact on adjusted net income

When you claim under the regime, your foreign income will be included when calculating your adjusted net income. This matters because your adjusted net income determines:

• Your entitlement to tax-free childcare and free childcare for working parents
• Whether you're liable for the High Income Child Benefit Charge

This means claiming the regime could affect your eligibility for childcare support or trigger a charge if you or your partner receive Child Benefit.

Is the regime right for you?

The 4-year FIG regime is a valuable relief for new UK residents with significant foreign income or capital gains. However, the loss of tax allowances and the impact on adjusted net income means it won't suit everyone.

You'll need to calculate whether the tax saved on your foreign income and gains exceeds the value of the allowances you'll lose, and consider any knock-on effects on benefits and charges.

Sources

• Check if you can claim the 4-year foreign income and gains regime

This article provides general guidance based on current HMRC rules. For advice specific to your situation, speak to your accountant.