Pillar Guide · Updated June 2026
UK Tax on Foreign Income 2026/27: Residency & the FIG Regime
How the UK taxes your overseas income and gains depends almost entirely on two things: whether you are UK tax resident, and — for recent arrivals — whether you qualify for the new Foreign Income and Gains (FIG) regime. April 2025 brought the biggest change in a generation: the centuries-old concept of domicile was largely swept away and the non-dom remittance basis was replaced by a residence-based, four-year exemption for new arrivals. This guide focuses on the mechanics — the Statutory Residence Test, how the FIG regime works, double taxation treaties, foreign tax credit relief, how to report it all on SA106, and Overseas Workday Relief.
The Statutory Residence Test — Where It All Starts
UK tax residence determines whether your worldwide income is in scope. Since 6 April 2013 residence has been decided by the Statutory Residence Test (SRT), applied in a fixed order:
- Automatic overseas tests: if you meet one, you are non-resident. Examples include spending fewer than 16 days in the UK (if resident in any of the prior three years), or fewer than 46 days (if not resident in the prior three years), or working full-time overseas.
- Automatic UK tests: if you meet one (and no overseas test applies), you are resident. The headline test is spending 183 or more days in the UK in the tax year. Having a UK home and full-time UK work are others.
- Sufficient ties test: if neither set is conclusive, you compare days spent in the UK against the number of UK ties — family tie, accommodation tie, work tie, the 90-day tie, and (for leavers) the country tie. The more ties, the fewer days you can spend before becoming resident.
For a detailed walkthrough of the day counts and ties, see the dedicated Statutory Residence Test guide. Getting residence right is the foundation — everything else follows from it.
The Foreign Income and Gains (FIG) Regime — From April 2025
The headline reform of recent years took effect on 6 April 2025. The remittance basis, which for decades allowed UK-resident but non-domiciled individuals to keep foreign income and gains outside UK tax unless they brought the money to the UK, was abolished and replaced by the FIG regime.
The FIG regime is fundamentally different in design:
- Residence-based, not domicile-based: it depends only on your tax-residence history, not where you are domiciled.
- Targeted at new arrivals: it rewards people moving to the UK for the first time (or after a long absence) with a temporary exemption.
- No remittance restriction: qualifying individuals can bring their exempt foreign income and gains to the UK freely during the window — there is no “trap” on remitting.
The change is intended to make the UK more attractive to internationally mobile talent in the early years while ensuring long-term residents are taxed on their worldwide income like everyone else.
The 4-Year FIG Exemption for New Arrivals
The core relief is a 100% exemption from UK tax on foreign income and gains for the first four tax years of UK residence. To qualify, you must have been non-UK-resident for the 10 consecutive tax years immediately before becoming resident.
| Feature | FIG regime (April 2025 on) |
|---|---|
| Eligibility | 10 prior years of non-UK-residence |
| Length of relief | First 4 tax years of residence |
| Foreign income | 100% exempt if claimed |
| Foreign gains | 100% exempt if claimed |
| Remittance restriction | None — money can be brought to the UK |
| Cost of claiming | Lose Personal Allowance & CGT exempt amount that year |
The four years run consecutively from your first year of residence. You must claim the exemption on your Self Assessment return for each year you want it. A subtle but important trade-off: in a year you claim FIG, you forfeit your Personal Allowance and your annual CGT exempt amount, so for someone with little foreign income it may not be worth claiming.
UK-source income and gains — UK employment, UK rental income, UK property gains — remain fully taxable throughout, regardless of the FIG regime.
Domicile Abolished as a Tax Concept
From 6 April 2025 domicile was removed as the basis for income tax and capital gains tax. The familiar terms “non-dom” and “deemed domicile” no longer drive your tax treatment. Instead, everything turns on residence and how long you have been resident.
Inheritance tax also moved to a residence basis. Broadly, an individual becomes a “long-term resident” — with worldwide assets in the UK IHT net — once they have been UK resident for at least 10 of the previous 20 tax years. This replaced the old domicile and deemed-domicile rules for IHT.
Those who were using the remittance basis before April 2025 were given transitional help, including a Temporary Repatriation Facility allowing previously unremitted foreign income and gains to be brought to the UK at a reduced tax rate for a limited period.
Double Taxation Treaties
Where foreign income is taxable both abroad and in the UK, double taxation agreements (DTAs) prevent it being fully taxed twice. The UK has treaties with more than 130 countries — one of the largest networks in the world.
- A treaty allocates taxing rights for each income type — dividends, interest, royalties, employment income, pensions and property income.
- It may give exclusive rights to one country, or allow both to tax with the residence country giving credit for the source-country tax.
- “Tie-breaker” clauses resolve cases where you would be resident in two countries under their respective domestic laws.
Always check the specific treaty for the country concerned — the treatment of the same income type can differ markedly from one treaty to another, and reduced withholding-tax rates often require a claim or certificate.
Foreign Tax Credit Relief
Foreign tax credit relief (FTCR) is the mechanism that gives effect to most treaty outcomes. If you have paid foreign tax on income that is also taxable in the UK, you can generally credit that foreign tax against your UK tax on the same income.
- The credit is limited to the lower of the foreign tax actually paid and the UK tax due on that income.
- Where a treaty caps the foreign tax (e.g. a 15% withholding rate on dividends), only the treaty rate is creditable — any excess must be reclaimed from the foreign tax authority.
- If no treaty exists, unilateral relief under UK domestic law usually still allows a credit.
FTCR is claimed on the SA106 foreign pages. If you are a basic-rate taxpayer and the foreign tax exceeds your UK liability on that income, the excess is generally not refundable in the UK — relief only goes as far as your UK tax on that slice of income.
Reporting Foreign Income on SA106
Foreign income and gains are declared on the SA106“Foreign” supplementary pages of the Self Assessment return. These pages capture:
- Overseas dividends, interest and savings income
- Foreign property and rental income
- Foreign pensions
- Foreign tax credit relief claims
- FIG regime claims for qualifying new arrivals
Income is reported in sterling, converted using an appropriate exchange rate (HMRC publishes monthly and average annual rates). For most UK residents foreign income is taxable on the arising basis — taxed when it arises overseas, not when you bring it to the UK.
You will also need the main SA100 return, and possibly SA108 for capital gains. If your only reason for filing is foreign income, you must still register for Self Assessment by 5 October following the relevant tax year. See the Self Assessment guide for the full process.
Overseas Workday Relief
Overseas Workday Relief (OWR) helps employees who perform some of their duties outside the UK in their early years of residence by reducing UK tax on the overseas-duties portion of their earnings.
From April 2025 OWR was reformed to dovetail with the FIG regime:
- It is available for the first four years of UK residence for qualifying new arrivals — aligning with the FIG window.
- The relief is now subject to an annual cap of the lower of £300,000 or 30% of total employment income.
- It applies to earnings attributable to duties performed outside the UK, apportioned on a just and reasonable basis (often by workday counts).
OWR is particularly relevant to executives and specialists who relocate to the UK but continue to travel and work abroad. Careful record-keeping of UK versus overseas workdays is essential to support the apportionment.
After the 4-Year Window
Once your four FIG years end, you are an ordinary UK resident taxed on the arising basis on your worldwide income and gains. There is no further income-tax exemption based on how long you have lived here.
Forward planning before year four closes can be valuable — for example, realising foreign gains within the exempt window, reviewing overseas structures, and considering the long-term IHT position as you approach the 10-of-20-years “long-term resident” threshold. The rules are intricate and the stakes are high, so internationally mobile individuals should take specialist cross-border tax advice rather than rely on general guidance.