The UK’s Foreign Income and Gains Regime: An overlooked opportunity for new arrivals and returning expats?

Much of the recent commentary around UK tax has focused on individuals leaving in response to high tax rates and the abolition of the remittance basis. However, this overlooks a more nuanced point in that the UK’s new Foreign Income and Gains (FIG) regime can create a clear opportunity for certain internationally mobile individuals.

In particular, the regime is highly attractive for:

• Individuals who have never lived in the UK, and

• Former UK residents who are returning after at least 10 consecutive years of non-UK residence

Where these individuals have significant foreign income and gains, the UK may now represent a surprisingly efficient jurisdiction - at least for a defined period.

At a high level, the FIG regime provides:

• A four-year period of exemption from UK tax on foreign income and gains

• Coverage for investment income and capital gains on non-UK assets

• The ability to bring those funds into the UK without triggering tax

• A regime based on residence rather than domicile, replacing the remittance basis

For individuals with significant offshore portfolios or anticipated liquidity events, this creates a valuable, time-limited window for tax-efficient access to foreign income and capital. However, it is important to note that the FIG regime is not a blanket exemption for all foreign income. In particular, foreign employment income is excluded. Salary, bonuses, and other employment earnings - whether from UK or overseas employers - are not covered by the FIG regime and are instead taxed under the UK’s standard employment income rules. In some cases, relief may be available under Overseas Workday Relief (OWR), but this operates as a separate regime with its own conditions and limitations. The application of OWR, and how it interacts with internationally mobile employees, will be explored in a separate article.

The benefits of the FIG regime are not indefinite and after the initial qualifying period, individuals become fully subject to UK tax on their worldwide income and gains. As such, the regime should be viewed as a strategic window during which individuals can:

• Accelerate the receipt of foreign income

• Crystallise capital gains

• Reorganise offshore structures

• Reposition assets in anticipation of full UK taxation

For the right individuals - particularly those with substantial foreign income and gains - the UK can offer a highly competitive, albeit temporary, tax environment. Whilst the regime is not designed for everyone, for internationally mobile individuals who meet the criteria, it represents a clear and valuable opportunity. Moreover, beyond tax considerations, the UK continues to offer strong fundamentals in terms of education, professional opportunities, legal infrastructure, and quality of life, which remain key drivers for many individuals choosing to relocate or return.

‍How can Sanctuary help?

The FIG regime represents a valuable but time-limited opportunity. Our specialist tax team helps you maximise this four-year window by reorganising your offshore structures and accelerating foreign income receipt before full UK taxation kicks in. Leveraging our deep expertise in both UAE and UK tax landscapes, we ensure your relocation is as tax-efficient as it is seamless.

Visit our Tax & Advisory service page to learn more about our tax & residency advisory, or contact us for a bespoke consultation via the contact form or email us at: hello@sanctuary.ae.