The FIG regime and Overseas Workday Relief for your 2025/26 tax return

Vanesha Mack, VKMACK Limited

Are you new to the UK?

The remittance basis is gone. Since 6 April 2025, it's been replaced by the Foreign Income and Gains (FIG) regime. If you arrived in the UK after the 5th April 2025, this could be one of the most valuable reliefs available to you.

Here's what you need to know:

If 2025/26 is one of your first 4 years of UK tax residence, following at least 10 consecutive tax years of non-UK residence, you are a "qualifying new resident" .

As a "qualifying new resident" you are get up to 4 tax years where your foreign income and gains can be claimed as fully exempt from UK tax and you can bring that money into the UK without triggering any further tax charge.

If you have employment income and you spend time working in both the UK and outside the UK, some of your employment income can be exempt from UK income tax under the Overseas Workday Relief (OWR) claim. However, please note OWR relief is now capped at the lower of 30% of qualifying employment income or £300,000 per year, and making the election means giving up your Personal Allowance and CGT Annual Exempt Amount for that year.

You have to actively include a claim on your Self Assessment return and there is a deadline to respect to ensure a claim is valid. For 2025/26, that means a filing deadline of 31 January 2027, with an extended claim deadline of 31 January 2028.

Although you are eligible to claim an exemption for your foreign income and gains under the FIG regime for the first 4 tax years, you can pick and choose which of your 4 years to claim in, ie skip a year if it does not make sense, then claim again later. But unused years cannot be carried forward or "saved."

Have you been in the UK for a while?

You are a longer-term resident who previously used the remittance basis if you were non-UK domiciled and claimed the remittance basis before 6 April 2025. The remittance basis no longer exists. Any foreign income or gains arising from 6 April 2025 onwards are taxed as they arise, unless you are still qualify for FIG relief.

If you were already claiming OWR before, the reform Transitional provisions allow you to claim an extra year of OWR if you meet the new FIG regime's 10-year non-residence test and the 30%/£300,000 cap will not apply to you. If you first claimed OWD in the 2022/23 tax year, you cannot claim OWD relief in 2025/26 as you have already claimed the relief for 3 tax years under the old rules. Earnings relating to duties performed before 6 April 2025 still fall under the old remittance basis rules, so they need to be paid and kept offshore to remain relieved.

If you have used up your 4-year FIG window the only way back in is a further period of at least 10 consecutive tax years of non-UK residence.

If you have old, untaxed foreign income or gains sitting offshore this is where the Temporary Repatriation Facility (TRF) comes in. It lets you bring pre-6 April 2025 foreign income and gains into the UK at a reduced, flat rate of tax. If you have projects in the UK for which you need to access your offshore funds, this is a genuine window to "clean up" old offshore balances. This facility is time-limited, so it's worth reviewing sooner rather than later.

This is a complex area with real money on the table (and real risk if claims are made incorrectly as HMRC does check these closely). Whether you are newly arrived, or a long-term resident with legacy offshore income, it is worth getting proper advice before your Self Assessment return is filed with HMRC.

Vanesha Mack VKMACK Limited

I am an experienced global mobility tax professional with over 20 years of experience working in tax in the Big 4, mid tier firms and a US bank. I am a chartered tax adviser with a passion to…