Autumn Budget – The highlights series by Sopher + Co (Article 1: Foreign Income and Gains)
As we reflect on the Autumn Budget delivered on the 30th October 2024, our colleagues will be sharing their initial reactions, delving into the changes to demonstrate what this may mean for you, your family and businesses.
Article 1 - Income Tax and CGT Reliefs to Relocate to the UK – Who Should Give a FIG?
The Autumn Budget delivered on 30th October, confirmed major changes to the taxation of non-UK domiciled individuals, introducing a residence-based tax system for income, capital gains, and Inheritance Tax, effective from April 2025. Stay tuned to our highlight’s series for further commentary on these changes.
Among the updates was confirmation and additional detail on the Foreign Income and Gains (FIG) regime, which provides tax relief on overseas income and gains for individuals’ first 4 years of UK tax residence.
James McLaughlin, Tax Director, discusses the FIG regime and shares the following insights:
- Broader Eligibility: The FIG regime isn’t just for “newcomers” to the UK—it will be available for individuals during their first 4 tax years of UK residence, following a period of at least 10 consecutive years of non-UK residence. The government has confirmed that this includes returning UK nationals and UK-domiciled/deemed domiciled individuals who meet these criteria (provided they aren’t members of Parliament or the House of Lords).
- Comparison with Remittance Basis: While the remittance basis could apply for up to 15 years, the FIG regime offers just 4 years. However, under the FIG regime, foreign income and capital gains can be brought to the UK tax-free, maintaining the full tax exemption.
- Check FIG Income Eligibility: Not all “foreign” income sources qualify under the FIG regime. For example, chargeable event gains from offshore life insurance policies or investment bonds are excluded, so it’s essential to verify eligibility for specific income or capital events.
- Existing UK Residents Eligible: Existing UK tax residents can also benefit from the FIG regime if any of their first 4 years of UK tax residence falls after April 2025. For instance, a non-dom who moved to the UK in 2024/25 could claim the remittance basis for that year and still be eligible for 3 years under the FIG regime, from April 2025 through April 2028.
- Four-Year Fling? Individuals may consider basing themselves in the UK to take advantage of the FIG regime. With no restrictions on bringing FIG proceeds to the UK tax-free, the FIG regime could be particularly appealing for those looking to realise significant income or capital events in the near future. However, whether the four-year regime is long enough to encourage long-term relocation to the UK remains to be seen.
Please note, this information is intended as a general overview. It is important that professional advice is sought on specific issues relevant to your circumstances. If you’re considering a move to the UK and would like to speak with one of our tax advisers, please contact us to find out more.
ice is sought on specific issues relevant to your circu