13 February 2025
The New FIG Regime: What Non-Doms Need to Know from April 2025
The UK government is introducing a significant overhaul of the taxation system for non-UK domiciled (non-dom) individuals, with a key change being the new Foreign Income and Gains (FIG) regime, effective from April 2025. This reform is designed to simplify tax structures and ensure fairness, especially for those with foreign income and gains. If you are a non-dom, understanding these changes is critical to optimizing your tax position. Here’s what you need to know about the FIG regime and how our tax practice can support you.
What is the FIG Regime?
The FIG regime is a new framework for taxing non-doms, replacing the current remittance basis of taxation. Under the existing system, non-doms can choose to pay tax only on their UK income and gains and on foreign income and gains brought (remitted) into the UK. While this can be a beneficial tax strategy for many, the new FIG regime will introduce a simplified approach, aiming to ensure greater fairness in the tax system.
From April 2025, non-doms will no longer have the option to claim the remittance basis indefinitely. Instead, a new foreign income and gains tax system will apply, with the following key features:
Key Features of the FIG Regime
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Four-Year Exemption for New UK Residents
Individuals who have been non-resident for at least ten consecutive tax years before becoming a UK resident can benefit from a four-year exemption under the FIG regime. During this period, foreign income and gains will not be subject to UK taxation, regardless of whether these funds are brought into the country. This exemption provides significant tax relief for those who are new to the UK tax system and allows them to adjust their financial arrangements over time. -
Simplified Taxation on Foreign Income
After the four-year exemption period, foreign income and gains will be taxed on a straightforward basis. This shift eliminates the need for complex remittance basis claims, streamlining tax filings and reducing the administrative burden for non-doms. -
Taxation on Worldwide Assets After Ten Years
The new regime introduces a residence-based taxation system. Non-doms will only be subject to UK inheritance tax on their worldwide assets after they have been UK tax residents for a continuous period of ten years. This change aligns the taxation of non-doms with that of UK domiciled individuals, providing greater consistency in how the estates of long-term UK residents are taxed.
How Our Tax Practice Can Help
With these major changes, the FIG regime introduces both opportunities and challenges for non-doms. Our tax practice is well-equipped to help you navigate the new system and ensure you make the most of its provisions. Here’s how we can assist:
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Tailored Tax Planning for New UK Residents
For clients who qualify for the four-year exemption, our tax practice can help create a comprehensive tax strategy. We will assess your foreign income and gains, guiding you on how to manage your assets efficiently during this period. Our team will also help you prepare for the transition to taxation on foreign income after the four years have passed. -
Foreign Income and Gains Optimization
If you are already residing in the UK and subject to the new tax rules, we can help you assess how to report your foreign income and gains in a tax-efficient manner. By understanding the specific provisions of the FIG regime, we can offer strategies that minimize the tax liabilities on your international income. -
Inheritance Tax Planning
For non-doms who are likely to be subject to UK inheritance tax on their worldwide assets after ten years of residence, it’s crucial to start planning ahead. We can help clients structure their estates to reduce exposure to inheritance tax through the use of trusts, gifts, and other estate planning tools. Our experts will assess your estate’s value and help you implement strategies that minimize inheritance tax liabilities. -
Cross-Border Tax Advice
Non-doms often have assets and income streams across multiple countries. Understanding how the new FIG regime interacts with international tax rules is crucial for efficient tax planning. We provide expert advice on cross-border tax matters, helping you navigate the complexities of tax treaties, foreign tax credits, and potential double taxation. -
Compliance and Reporting
The transition to the FIG regime means that non-doms will need to adapt to new reporting requirements. Our practice will ensure that you are fully compliant with all the reporting obligations under the new tax laws, including the filing of your tax returns and disclosures of foreign income and gains. We will guide you through the necessary steps to remain compliant and avoid any penalties.
Our tax practice offers comprehensive, practical advice on managing your tax affairs under the new FIG regime. With a deep understanding of both UK and international tax law, we are well-positioned to help non-doms navigate these reforms effectively. Our team’s experience spans across tax planning, compliance, estate structuring, and cross-border issues, making us your trusted partner for addressing the complexities of the new tax landscape.
The new FIG regime represents a fundamental shift in the way non-doms will be taxed in the UK. While it simplifies the system for many, it also introduces new challenges for those with international assets and income. By partnering with our tax practice, you can ensure that you are well-prepared for the changes ahead, helping you manage your tax liabilities effectively and optimize your financial strategies. Contact us today to learn how we can help you navigate the new tax landscape with confidence.