The 4-Year FIG Regime Explained: A Guide for Returning UK Expats

You qualify if you are UK tax resident and within your first four tax years of UK residence, following at least ten consecutive tax years of non-UK residence. Residence is decided each year under the Statutory Residence Test, and HMRC's guidance on claiming the 4-year FIG regime sets out the conditions.

Nationality and domicile are irrelevant. A British citizen returning after twelve years in Dubai or Singapore qualifies on the same basis as someone arriving in the UK for the first time.

The four years are consecutive and run from the start of your UK residence, not from your first claim. Although the regime began on 6 April 2025, HMRC's guidance confirms that someone who became UK resident from 2022-23 onwards, after ten years abroad, can claim for whichever of their first four years fall in 2025-26 or later. If you become temporarily non-resident during the four years, you cannot claim for the years you are away, but any remaining years stay available when you return.

Relief can be claimed on:

• dividends from non-UK companies
• interest on foreign bank accounts
• profits of an overseas property business
• profits of a trade carried on wholly outside the UK
• foreign capital gains

Some foreign pension income can also qualify, although certain types are excluded; our article on tax on overseas pensions in the UK explains how overseas pension income is normally taxed. Income from foreign employment is not covered by the regime, and UK income and gains are taxed in the normal way whatever you claim.

Relieved income and gains can be brought into the UK without any tax charge — a key difference from the old remittance basis. Any foreign income or gains you do not claim relief on are taxed as normal, at the rates set out in our articles on capital gains tax and dividend tax.

For any tax year in which you make a claim, you lose:

• the income tax personal allowance, currently £12,570
• the capital gains tax annual exempt amount, currently £3,000
• the Marriage Allowance, Married Couple's Allowance and Blind Person's Allowance

These are lost for the whole year, whatever the size of the claim, and whether you claim on income, gains or both. This is where the regime divides returning expats.

If your adjusted net income from other sources is £125,140 or more, your personal allowance is already reduced to nil under the taper explained in our article on the £100k tax trap. Relieved foreign income is disregarded when working out adjusted net income, so the question is whether your other income alone already removes the allowance. If it does, the real cost of claiming is largely the £3,000 capital gains allowance.

If your UK income is modest and your foreign income and gains are small, the allowances you give up may be worth more than the tax saved. On a large overseas gain, by contrast, capital gains tax at 24% for a higher-rate taxpayer can far outweigh the allowances lost.

• Claims are made on your Self Assessment tax return for the year concerned. There is no separate application.
• A claim does not roll forward. A claim for year one does not apply to years two, three or four — each year is a fresh decision.
• Claims are made source by source. You can choose which foreign income and gains to claim relief on and leave others taxed normally.
• The amount must be quantified. HMRC's guidance is clear that an unquantified claim is invalid, and only the amount you quantify is relieved.
• Claims must be made within 12 months of the normal Self Assessment filing date for the year.

The quantification rule catches people out. Quantifying overseas gains means establishing sterling acquisition costs and disposal proceeds for every asset involved — records that can be hard to reconstruct years after purchase. Gathering them before you return is time well spent.

The same reforms moved inheritance tax onto a residence basis from 6 April 2025. Whether your non-UK assets fall within UK inheritance tax depends on whether you are a long-term UK resident — UK resident for at least ten of the twenty tax years before the year in question. The FIG regime does not change your inheritance tax position, so the two need to be looked at together. Our article on inheritance tax sets out how the tax works.

Other points worth checking before or soon after you return:

For the year you become resident, HMRC's guidance on UK residence and tax explains how residence is worked out, and our article on investment bonds covers how onshore and offshore bonds are taxed.

The regime tends to be most valuable where:

• you have large unrealised gains on overseas assets you intend to sell or reorganise
• you receive significant foreign dividends, interest or rent
• your UK income already removes your personal allowance

It may be worth little or nothing where:

• your foreign income and gains are small
• your UK income is low enough that your personal allowance is worth more than the relief
• your overseas assets will not produce income or gains during the four years

Because each year is a separate decision, the right answer can change from one year to the next. Given what is at stake and the cross-border issues involved, regulated financial advice — alongside specialist tax advice — may be appropriate before your return rather than after it.