FIG Regime Claim: What the First Real Filing Season Demands
Your FIG regime claim must appear on the tax return itself, correctly quantified, or HMRC simply taxes your worldwide income instead. The 2025/26 return marks the first year the foreign income and gains regime applies in practice. Consequently, the filing deadline of 31 January 2027 represents the first genuine test of the new rules. Furthermore, thousands of new arrivals will discover that relief they assumed was automatic requires an active, annual, quantified election.
Americans face an additional layer that UK-focused guidance ignores completely. Specifically, a successful claim eliminates UK tax, which in turn eliminates the foreign tax credit that shelters your Form 1040. At TaxYork we model both returns together before either is filed, because the optimal UK answer is frequently the wrong worldwide answer.
What a FIG Regime Claim Actually Delivers
A FIG regime claim gives 100% relief from UK tax on your qualifying foreign income and foreign gains for a given tax year. Specifically, the relief covers non-UK income and non-UK chargeable gains arising on or after 6 April 2025. Therefore, the regime replaced the remittance basis entirely, and it no longer matters whether you bring the money into Britain.
HMRC explains the framework in helpsheet HS266 on the foreign income and gains regime. Importantly, no cap applies to the amount of relief claimed. Consequently, a new arrival with £4 million of overseas gains obtains the same complete exemption as one with £40,000.
Who Qualifies as a Qualifying New Resident
Three conditions govern eligibility. Firstly, the tax year must fall within your first four years of UK residence. Secondly, you must have been non-UK resident for at least ten consecutive tax years immediately beforehand. Thirdly, members of either House of Parliament cannot qualify.
Residence follows the statutory residence test set out in RDR3 rather than any perception of where you live. Additionally, HMRC provides a screening tool to check whether you can claim the four-year foreign income and gains regime. Returning British citizens qualify equally, provided the ten-year absence holds.
Why Americans Face a Different Calculation Entirely
Citizenship-based taxation changes the arithmetic fundamentally. The United States taxes your worldwide income regardless of where you live and regardless of British reliefs. Therefore, a FIG regime claim does not remove the income from taxation; instead, it moves the tax from London to Washington.
That shift produces winners and losers. Consequently, the correct question is never whether the claim reduces UK tax, because it always does. Rather, the question is whether it reduces your combined UK and US liability once foreign tax credits are recomputed.
Making the FIG Regime Claim on Your Self Assessment Return
Nothing about a FIG regime claim happens automatically. Specifically, you claim it on the residence pages of your Self Assessment return, and you claim it separately for every year you want it. Moreover, HMRC retitled those pages for 2025/26 onwards to reflect the new regime.
The SA109 Boxes That Carry Your FIG Regime Claim
The SA109 supplementary pages now read "Residence and foreign income and gains (FIG) regime". You place an X in box 28 to claim relief on foreign income, and box 29 to claim relief on foreign gains. Additionally, box 30 covers income from qualifying asset holding companies. Claiming both income and gains requires both boxes, and the HMRC guidance on making a FIG regime claim confirms the mechanics.
Ticking the box only begins the job. Subsequently, you must enter the relieved amounts on the relevant supplementary pages, whether SA106 for foreign income, SA108 for capital gains, SA103F for self-employment or SA104F for partnership income. Consequently, a return with box 28 ticked but no quantified figures fails.
Quantifying the Claim Source by Source
Quantification is the most misunderstood requirement of the entire FIG regime claim. You must state the amount of relief claimed, calculated for each source under the tax rules applicable to that source. Notably, failing to quantify the claim at all invalidates it completely.
However, incorrect quantification does not invalidate the claim. Instead, HMRC relieves only the amount you actually claimed. Therefore, understating a £400,000 gain as £300,000 leaves £100,000 taxable in the United Kingdom, even though full relief was available. In our experience, this single arithmetic slip costs new arrivals more than any other error in the regime.
Deadlines, Amendments and the 31 January Trap
Two separate dates govern every FIG regime claim, and confusing them proves expensive. The 2025/26 return itself falls due on 31 January 2027 under the standard Self Assessment deadlines. Meanwhile, the FIG regime claim deadline runs to the anniversary of that date, namely 31 January 2028.
That extra year provides genuine breathing room for amendments. Nevertheless, relying on it invites trouble, because a late notice to file can shift the window. Furthermore, an amended claim requires an amended return, which reopens HMRC's enquiry period.
What You Surrender When You Make the Claim
Every FIG regime claim carries a defined price. Specifically, you forfeit several allowances for that tax year, and you lose the ability to use foreign losses. Additionally, the forfeiture applies in full even when you claim on one category only.
The Personal Allowance and Annual Exempt Amount
Claiming costs you the £12,570 personal allowance and the £3,000 capital gains tax annual exempt amount. Moreover, you also lose blind person's allowance, married couple's allowance and the transferable marriage allowance. Critically, the HMRC guidance on the effects of a claim confirms these losses apply whether you claim for foreign income only, foreign gains only, or Overseas Workday Relief only.
That last point catches people badly. For instance, an employee electing only for Overseas Workday Relief still surrenders the full personal allowance. Therefore, small elections carry the same fixed cost as large ones.
Foreign Losses Disappear for the Year
Foreign capital losses, overseas trading losses and overseas property business losses cease to be allowable in any year you make a FIG regime claim. Consequently, a portfolio showing £500,000 of gains and £120,000 of losses delivers no loss relief at all once relieved. Furthermore, those losses cannot be carried forward into later years.
Sequencing therefore matters enormously. Specifically, realising losses in a non-claim year preserves them, whereas realising them inside a claim year destroys them. Additionally, the current capital gains tax rates determine exactly how much that destroyed relief was worth.
Foreign Tax Credit Relief Cannot Sit Alongside the Claim
Income relieved by a FIG regime claim cannot also carry UK foreign tax credit relief. Specifically, you claim credit only on the proportion of foreign income left outside the claim. Logically this makes sense, because relieved income bears no UK tax to credit against.
The consequence bites hardest on US-source income. Consider a US citizen in London receiving American dividends already taxed by the IRS. Relieving that income under the FIG regime removes the UK charge, so no UK relief is needed. However, a partial claim creates a genuine trap, because the unrelieved slice must carry its own proportionate credit computation.
Why the Allowance Loss Rarely Matters to High Earners
Almost every published guide treats the lost personal allowance as the central FIG regime claim decision. For our clients, that framing is simply wrong. Specifically, high earners have usually lost the allowance already through the taper.
The Taper Has Already Taken It
The personal allowance tapers away once adjusted net income exceeds £100,000, disappearing entirely at £125,140. Therefore, an investment banker earning £400,000 forfeits nothing whatsoever by claiming. We examine that mechanism in detail in our guide to the UK personal allowance taper for American high earners.
The annual exempt amount loss is similarly trivial at this level. Specifically, £3,000 relieved at 24% saves £720. Consequently, sophisticated clients should ignore the allowance question almost entirely and focus on the credit position instead.
Pension Relief and the £3,600 Floor
One genuine FIG regime claim cost does apply. Relief on registered pension contributions can reduce by the amount of foreign income relief claimed, because relieved income no longer counts as relevant UK earnings. Nevertheless, relief cannot fall below the basic amount of £3,600.
Employees with substantial UK salaries rarely notice this. However, a claimant whose income consists mainly of overseas earnings may lose meaningful pension relief. Therefore, model contributions before finalising the claim rather than afterwards.
Child Benefit and Adjusted Net Income
A helpful quirk operates alongside the FIG regime claim here. Foreign income relief is disregarded when calculating adjusted net income for the High Income Child Benefit Charge and for childcare entitlements. Consequently, a claim does not inflate the figure used for those tests, and our analysis of the High Income Child Benefit Charge for American professionals explains the thresholds involved.
Overseas Workday Relief Alongside Your FIG Regime Claim
Employees seconded to London hold a second, related election. Specifically, Overseas Workday Relief exempts the portion of your UK employment income that relates to duties performed abroad. Furthermore, the reforms aligned the relief with the four-year window, so eligibility now tracks your FIG regime claim exactly.
How the Four-Year OWR Election Works
Eligibility depends on residence for the year and on qualifying for the four-year regime, as the government guidance on Overseas Workday Relief confirms. Consequently, the same ten-year absence test governs both reliefs. Additionally, HMRC sets out the detailed conditions at EIM43560 on Overseas Workday Relief eligibility.
One welcome simplification arrived with the reform. Employees no longer need to keep the relieved earnings in an offshore account, which removed a banking trap that caught hundreds of secondees annually. Therefore, the relief now depends purely on where you performed the duties.
The election is separate from your foreign income and gains election, yet it carries identical consequences for allowances. Consequently, an employee electing for Overseas Workday Relief alone still forfeits the personal allowance and the annual exempt amount in full. In practice, that makes a combined FIG regime claim almost costless once either election is made.
The 30% and £300,000 Financial Limit
An annual cap now restricts the relief sharply. Specifically, relief cannot exceed the lower of 30% of your qualifying employment income or £300,000 for the year, and EIM43600 on the Overseas Workday Relief financial limit explains the computation. Therefore, an executive earning £1.5 million with half her duties abroad relieves £300,000 rather than £750,000.
Modelling the cap changes travel decisions materially. For instance, additional overseas workdays add nothing once you reach the limit. Consequently, senior secondees should establish the ceiling early in the tax year rather than reconstructing workday diaries the following January.
Americans gain less than the headline suggests. Specifically, relieved employment income still faces US tax in full, and the exclusion for foreign earned income rarely helps executives at this level. Therefore, treat Overseas Workday Relief as a UK-only saving that a FIG regime claim cannot extend across the Atlantic.
Evidence and Record-Keeping Your Claim Requires
Documentation decides enquiries. Specifically, HMRC expects a contemporaneous workday record showing the location of duties for every working day in the year. Furthermore, boarding passes, calendar entries and payroll allocations should reconcile precisely to the figures on your return.
Currency translation deserves equal care. Every foreign amount entered against a FIG regime claim must convert to sterling on a consistent, defensible basis, source by source. Consequently, mixing spot rates and average rates across sources invites adjustment.
Retain the evidence for at least four years after the filing deadline. Moreover, keep the valuation and cost records supporting each relieved gain, because a later non-claim year may need that same base cost. In our experience, reconstructing this material three years later costs several times what contemporaneous record-keeping would have cost.
The American Half: What a FIG Regime Claim Cannot Fix
Here lies the gap in every UK-only guide. A FIG regime claim reduces British tax to nil on the relieved income, yet your American liability continues untouched. Therefore, the relief frequently transfers revenue from HMRC to the IRS rather than saving you money.
Zero UK Tax Means Zero Foreign Tax Credit
The foreign tax credit on Form 1116 requires foreign tax actually paid or accrued, which a FIG regime claim removes entirely. Consequently, relieving your foreign income under the FIG regime destroys the credit that would otherwise offset your US tax on the same income. In effect, you swap a 24% or 39.35% UK charge for a US charge of up to 37% plus surtaxes.
Whether that swap helps depends entirely on the rate differential. For instance, long-term capital gains taxed at 20% federally beat a 24% UK charge comfortably. Conversely, non-qualified dividends taxed at 37% federally lose against the same UK rate. Therefore, run the comparison source by source rather than in aggregate.
US-Source Income and the Resourcing Problem
Third-country income behaves predictably under a FIG regime claim, whereas US-source income does not. Specifically, dividends from American companies remain US-source, so the IRS asserts primary taxing rights under the US-UK tax treaty documents. Consequently, claiming the FIG regime on that income costs you nothing in credit terms, because the credit was flowing the other way.
Understanding which direction relief flows is essential. Furthermore, our tax treaty optimisation specialists model resourcing positions before the SA109 is signed. Additionally, our earlier analysis of the FIG regime trap for US citizens examines the underlying mismatch.
NIIT, Reporting and the Obligations That Never Pause
The 3.8% net investment income tax survives every FIG regime claim. Specifically, no foreign tax credit offsets it, as IRS Topic 559 confirms, and the thresholds sit at $200,000 or $250,000 jointly. Therefore, claimants with large investment portfolios pay that surtax regardless.
Reporting obligations continue in parallel. Consequently, your UK accounts still require Form 8938 disclosure and an annual foreign bank account report. Moreover, IRS Topic 409 on capital gains governs how the relieved gains appear on your American return.
Year-by-Year Decisions Across the Four-Year Window
Treating your FIG regime claim as a single four-year decision wastes it. Instead, treat each year as a separate optimisation with its own numbers. Furthermore, the annual claim requirement makes that flexibility explicit.
Each Year Stands Entirely Alone
A claim for year one confers nothing on years two, three and four. Specifically, you must repeat the election annually, and unused years cannot roll forward beyond the four-year window. Consequently, a claimant who forgets year three simply pays UK tax on that year's foreign income, as the HMRC introduction to the FIG regime makes clear.
That annual reset creates real planning value. For example, claiming in years one and two while declining in years three and four preserves foreign losses for the later years. Therefore, review the position every single autumn.
Timing Disposals and Dividends Inside the Window
Concentrating realisations inside FIG regime claim years produces the largest saving. Specifically, sell appreciated overseas holdings while a claim applies, and realise losses in years when no claim applies. Additionally, controlling dividend timing from your own overseas companies achieves the same effect.
The four-year clock runs from the first year of UK residence, not from your first claim. Consequently, delaying arrival by a few weeks across 5 April can add a full year of relief. Meanwhile, general guidance on tax on foreign income sets out the default position once the window closes.
The Arrival Year and Split-Year Treatment
Your first UK tax year rarely runs from 6 April. Instead, split-year treatment commonly divides it into an overseas part and a UK part. Consequently, foreign income and gains arising in the overseas part fall outside UK tax altogether, without needing any FIG regime claim at all.
That distinction carries real money. Specifically, a gain realised in August before an October arrival needs no relief, whereas the identical gain realised in November requires a quantified claim. Therefore, accelerating disposals into the overseas part preserves your foreign losses and your annual exempt amount for the UK part of the same year.
The four-year clock still starts in that split year. Consequently, a client arriving in March uses an entire qualifying year for five weeks of relief. Moreover, deferring that arrival across 6 April converts those five weeks into a full additional year, which regularly proves the single most valuable decision in the whole exercise.
Pre-arrival planning therefore beats post-arrival claiming every time. For instance, crystallising appreciated holdings, resetting base costs and taking dividends before residence begins removes them from the UK net permanently. Nevertheless, none of that helps the American position, because the IRS taxes those realisations in the year they occur regardless of British residence. Accordingly, we sequence pre-arrival transactions against the US calendar year as well as the UK tax year.
What Happens in Year Five
From year five, no FIG regime claim is available and the arising basis applies to your worldwide income and gains. Therefore, restructuring must complete before that point. Furthermore, the Temporary Repatriation Facility offers a separate route for pre-2025 funds, which we cover in our guide to the Temporary Repatriation Facility and your US foreign tax credit.
Rebasing and asset location decisions belong in years three and four. Consequently, waiting until the window expires eliminates every meaningful option.
Worked Case Study: A Managing Director's First London Year
A US citizen client moved from Singapore to London on 1 September 2025, having lived outside Britain for fourteen consecutive tax years. She therefore qualified as a new resident for 2025/26. Additionally, her UK employment income reached £520,000, which remained fully taxable regardless of any claim.
Her overseas position comprised £134,000 of Singapore dividends and a £446,800 gain on a Singapore investment portfolio. Furthermore, one holding produced a £12,000 loss, and she separately realised a £40,000 gain on a UK-listed holding. Singapore levied no tax on any of it.
The Position Without a Claim
Without a claim, the arising basis taxed everything. Her chargeable gains totalled £446,800 less the £12,000 loss and the £3,000 annual exempt amount, giving £431,800 at 24%, or £103,632. Additionally, the £134,000 of dividends attracted the 39.35% additional rate, producing £52,729.
Her UK bill on the overseas items therefore reached £156,361. Notably, no credit relief applied, because Singapore had taxed none of it. However, that British tax generated substantial American foreign tax credit.
The Position With the Claim
With her FIG regime claim entered in boxes 28 and 29 and both amounts quantified, her UK tax on the overseas income and gains fell to nil. The personal allowance loss cost her nothing, because her £520,000 salary had already tapered it away entirely. Meanwhile, the £12,000 foreign loss became unusable, though it had nothing left to offset.
One real cost did arise. Losing the annual exempt amount increased the tax on her separate £40,000 UK gain by £720. Consequently, her total UK cost of claiming amounted to precisely that £720.
The Combined Outcome Across Both Countries
The American computation reveals why the claim saves far less than it appears. Her US liability on the same income comprised $66,600 of ordinary tax on non-qualified dividends of $180,000, plus $120,000 of long-term capital gains tax on a $600,000 gain. Furthermore, the net investment income tax added $29,640, giving $216,240 in total.
Without the claim, her £156,361 of UK tax converted to $209,993 of foreign tax credit at 1.343. That credit exceeded her $186,600 of regular US tax, so it eliminated the regular liability entirely and wasted $23,393. Nevertheless, the $29,640 surtax remained payable, because no credit reaches it.
Her worldwide cost without a claim therefore reached $239,633. With the claim, she paid $967 in Britain and $216,240 in America, totalling $217,207. Consequently, the FIG regime claim saved her $22,426, not the $209,993 that a UK-only calculation would have advertised.
Getting an Incorrect or Missed Claim Put Right
FIG regime claim errors surface constantly in a regime this new. Fortunately, both authorities provide structured correction routes. Moreover, acting voluntarily always produces better outcomes than waiting.
Amending the UK Return
An understated or omitted FIG regime claim can be corrected until 31 January 2028 for 2025/26. Therefore, review every quantified figure against the underlying statements before that date passes. Additionally, an amendment restarts HMRC's enquiry window, so ensure the revised figures are genuinely final.
Missed UK tax returns require a different approach entirely. Consequently, we recommend voluntary disclosure rather than waiting for an HMRC nudge letter, particularly where overseas accounts feature in automatic exchange data.
Correcting Missed US Filings
Americans who arrived in Britain and stopped filing face a separate problem. Specifically, missed US tax returns and missed FBAR filings often qualify for the IRS Streamlined Filing Compliance Procedures, which waive penalties where the failure was non-wilful. Furthermore, employment income may still attract relief under the foreign earned income exclusion for the years concerned.
Our IRS Streamlined Filing service handles the full catch-up package. Additionally, we prepare the ongoing US tax returns for expats that follow.
How TaxYork Can Help
We prepare the UK and US returns as one integrated FIG regime claim engagement. Specifically, we test each foreign source under both regimes, quantify the claim precisely on the SA109, and recompute your Form 1116 position before anything is filed. Consequently, our clients see a single worldwide number rather than two disconnected answers.
Our team also handles the timing decisions that create the value. For instance, we sequence disposals across claim and non-claim years, protect foreign losses, and model the fourth-year exit before it arrives. Additionally, we manage FBAR and FATCA reporting throughout the four-year window.
Conclusion
A FIG regime claim demands an active, annual, quantified election on box 28 or box 29 of your SA109. Furthermore, it costs you the personal allowance, the annual exempt amount and every foreign loss for that year. However, high earners have usually lost the allowance already, so the real decision lies elsewhere entirely.
For Americans, the FIG regime claim decision turns on the foreign tax credit rather than on British allowances. Above all, remember that relieving UK tax removes the credit that shelters your US return. Ultimately, the claim still pays for most of our clients, though by a fraction of the amount that UK-only arithmetic suggests.
Contact Us
Speak to our cross-border specialists well before the 31 January filing date, not during the final week. You can book a consultation with our team, email hello@taxyork.com, or telephone 020 3488 8606. Additionally, we act for new arrivals across London, New York, Singapore and the Gulf.
Disclaimer
This article provides general information about the FIG regime claim and does not constitute tax advice. Tax rules change frequently and outcomes depend entirely on individual circumstances. Therefore, you should obtain professional advice before acting. TaxYork accepts no liability for decisions taken solely on the basis of this content.