The UK’s new FIG Regime: a four-year planning window for returning British expats

For many British expatriates, the idea of returning to the UK can feel emotionally straightforward.

Family, familiarity, healthcare, ageing parents, grandchildren, a change in lifestyle, or simply the sense that it may be time to come home.

But financially, returning to the UK is rarely simple.

For UK nationals who have lived abroad for many years — whether in Portugal, Spain, Dubai, Switzerland, Asia, or elsewhere — the decision to repatriate can trigger a major shift in tax exposure, investment planning, pension strategy, estate planning and cashflow.

And since 6 April 2025, that decision has become even more nuanced with the introduction of the UK’s new Foreign Income and Gains regime, often referred to as the FIG regime.

The FIG regime replaced the old remittance basis rules and offers a potentially valuable, but time-limited, opportunity for certain individuals becoming UK tax resident after a long period of non-UK residence. In broad terms, qualifying individuals may be able to claim relief from UK tax on foreign income and foreign gains for up to four tax years. 

HMRC guidance confirms the regime applies from the 2025/26 tax year and is aimed at those who meet the relevant residence conditions - https://www.gov.uk/guidance/check-if-you-can-claim-the-4-year-foreign-income-and-gains-regime).

For some returning British expats, this could be an important planning window.

But it is not automatic. It is not available to everyone.

And it should not be looked at in isolation.

Why the FIG regime matters for returning expats

Historically, much of the discussion around UK non-dom taxation focused on foreign nationals coming to the UK. The old remittance basis was often associated with wealthy non-domiciled individuals who could shelter foreign income and gains from UK tax, provided those funds were not brought into the UK.

That system has now changed.

From 6 April 2025, UK tax residence is far more important than domicile when considering the treatment of foreign income and gains. Under the new regime, UK residents are generally taxed on worldwide income and gains as they arise, unless they are eligible for and claim FIG relief. 

The Low Incomes Tax Reform Group explains that the new rules replace the remittance basis and that domicile is no longer relevant when calculating UK tax liability on income and gains arising from 6 April 2025 - https://www.litrg.org.uk/international/uk-tax-uk-residents-foreign-income-and-gains/foreign-income-and-gains-regime-tax-years-202526

This is particularly relevant for UK expats who have been outside the UK for a significant period.

Someone who has lived abroad for many years may, on returning to the UK, potentially qualify for a four-year period during which certain foreign income and gains are relieved from UK tax.

That could include, depending on the circumstances:

1. foreign investment income

2. foreign dividends

3. foreign bank interest

4. rental income from overseas property

5. capital gains on non-UK assets, and

6. potentially certain foreign pension income

The planning opportunity is clearly obvious.

A returning expat may have overseas assets, investments, pensions, property, business interests, or investment bonds accumulated during years abroad. The FIG regime could allow time to review, restructure, realise gains, draw income, or simplify overseas arrangements before full UK worldwide taxation applies.

But this is exactly where the advice needs to be careful. The FIG regime is not just about whether you qualify. It is about whether claiming it is actually the right thing to do.

The four-year window is valuable — but short

The phrase “four-year window” sounds generous.

In planning terms, however, four tax years can pass very quickly.

A returning expat may need to consider:

• whether to sell overseas investments, 

• whether to crystallise foreign gains, 

• whether to restructure foreign portfolios, 

• whether to retain or dispose of overseas property, 

• whether to draw from non-UK pensions, 

• whether to remit funds to the UK, 

• whether to unwind legacy offshore structures, and 

• how the position changes after the FIG period ends.

The regime may provide relief for qualifying foreign income and gains, but it does not remove the need to understand the long-term position.

After the FIG window ends, the individual is generally within the UK tax net on worldwide income and gains. Forvis Mazars summarises the position clearly: the FIG regime is generous for four years, but after that UK residents will be taxed in the UK on worldwide income and gains - https://www.forvismazars.com/uk/en/insights/personal-wealth-and-tax-planning-insights/what-is-the-four-year-fig-regime

That means the planning question is not simply:

“Can I use the FIG regime?”

It is:

“How do I use this period intelligently before the UK tax position changes?”

That is a very different conversation.

Eligibility: the residence history matters

One of the key requirements is residence history.

Broadly, the regime is aimed at individuals becoming UK resident after a long period of non-UK residence. HMRC guidance refers to the need to satisfy the relevant conditions and confirms that the relief is available for a four-year period linked to UK tax residence - https://www.gov.uk/guidance/check-if-you-can-claim-the-4-year-foreign-income-and-gains-regime

This makes the Statutory Residence Test extremely important.

For returning British expats, the exact year of UK tax residence can have significant consequences. Spending too many days in the UK, having available accommodation, working in the UK, or maintaining strong UK ties can all affect the residency outcome.

This is where people can accidentally create a problem.

They may think they are “moving back next year”, but in reality, they may already have become UK tax resident earlier than expected.

That can affect:

• the start of the FIG window, 

• the availability of relief, 

• the tax treatment of foreign gains, 

• the timing of pension withdrawals, and 

• the wider planning strategy.

In cross-border planning, the order of events matters.

Sometimes, becoming UK resident in April rather than March can make a material difference.

Sometimes, selling an overseas asset before return may be sensible.

Sometimes, waiting until after return may produce a better result if FIG relief applies.

And sometimes, claiming FIG relief may not be worthwhile at all.

The trade-off: giving up UK allowances

One of the more delicate points is that FIG relief is not cost-free.

HMRC’s helpsheet notes that if a claim is made for FIG relief, the individual may lose entitlement to the UK personal allowance and the capital gains tax annual exempt amount for that tax year - https://www.gov.uk/government/publications/foreign-income-and-gains-fig-regime-self-assessment-helpsheet-hs266/hs266-foreign-income-and-gains-fig-regime-2026

For high-net-worth individuals with substantial foreign income or gains, that trade-off may be acceptable.

For others, it may not be.

For example, someone with modest foreign income may find that the value of the relief is outweighed by the loss of UK allowances.

Equally, someone with large foreign gains may find the relief extremely valuable in one year but less relevant in another.

That means the decision should be reviewed year by year.

It should not be assumed that claiming FIG relief every year is automatically the best approach.

Foreign pensions: a particularly sensitive area

For many British expats, pensions are one of the largest planning issues.

A returning UK expat may hold:

• UK defined contribution pensions, 

• UK final salary pensions, 

• QROPS arrangements, 

• international pensions, 

• overseas employer pensions, or 

• legacy offshore pension structures.

The interaction between foreign pension income, UK tax residence, treaty treatment and the FIG regime needs careful review.

Some pension income may fall within the foreign income rules, depending on the nature of the pension, the source of the income, and the individual’s circumstances. But pensions should never be treated casually in this context.

For many expats, pension planning also interacts with:

• UK lifetime retirement strategy, 

• Portugal or overseas tax residence before return, 

• double tax treaty treatment, 

• inheritance tax, 

• beneficiary planning, 

• currency risk, and 

• post-return income requirements.

The question is not simply whether income can be drawn during the FIG window. The question is whether doing so fits the wider retirement plan.

A short-term tax opportunity should never undermine a long-term income strategy.

Overseas property and investment portfolios

Many returning expats also hold overseas property.

This could be a main home in Portugal, a rental property in Spain, a Dubai property, or other foreign real estate.

The FIG regime may influence the timing of a disposal, especially where there is a significant gain. But this must be considered alongside local tax rules in the country where the property is situated.

For example, selling a Portuguese property may create Portuguese tax consequences regardless of the UK position. Similarly, selling a Spanish or UAE-based asset may involve local legal, tax, currency and reporting considerations.

Investment portfolios also need careful review.

A portfolio built while living abroad may not be suitable once the individual becomes UK resident again.

Issues can include:

• UK reporting fund status, 

• offshore funds, 

• accumulating funds, 

• foreign currency exposure, 

• platform availability, 

• tax reporting, 

• income versus growth strategy, and 

• estate planning.

The FIG window may provide time to restructure, but the restructuring itself needs to be coordinated properly.

The repatriation 'trap': coming back before planning

The biggest mistake is often returning first and planning afterwards.

By the time someone has moved back to the UK, registered with HMRC, sold property, transferred funds, drawn pensions or closed foreign accounts, many of the important decisions may already have been made.

And some of those decisions may be difficult or impossible to unwind.

For returning British expats, the key questions should ideally be considered before becoming UK resident again:

• When exactly will I become UK tax resident? 

• Do I qualify for FIG relief? 

• Which foreign income and gains are likely to arise during the four-year period? 

• Should I realise any gains before or after returning? 

• Should I draw foreign pension income during the FIG window? 

• What happens to my overseas investment bond, platform or portfolio? 

• Should I retain or sell overseas property? 

• What is the inheritance tax position once I return? 

• Do I intend to remain in the UK permanently? 

• What happens after the four years end?

These are not just tax questions. They are financial planning questions.

The human side of returning home

There is also an emotional side to this.

Many expats return to the UK because life has changed.

Parents are ageing. Children have moved back. Grandchildren arrive. Healthcare becomes more important. A spouse wants to be closer to family. The lifestyle abroad no longer feels quite the same.

Those are perfectly valid reasons.

But emotional decisions often happen faster than financial planning decisions.

A client may decide they are “done” with life abroad and want to move within months.

That is understandable.

But if they have accumulated wealth overseas, the difference between moving quickly and moving carefully can be substantial.

Good planning does not mean delaying life. It means making sure the move happens in the right order.

A planning opportunity, not a planning strategy

The FIG regime should be viewed as an opportunity, not a complete strategy.

It may provide a valuable four-year window. But it does not answer the bigger questions:

How should your assets be structured once you are UK resident?

What level of income do you need?

Which pensions should you draw first?

Should you retain overseas property?

How should you manage currency risk?

What is your long-term inheritance tax exposure?

Should you simplify overseas structures?

What happens if you return abroad again later?

For internationally mobile families, tax rules are only one part of the picture.

The real value comes from joining the pieces together.

Final thought...

For UK expats considering a return to the UK, the new FIG regime could be highly valuable.

But it is also technical, time-limited and dependent on individual circumstances.

Used well, it may create a meaningful opportunity to reorganise foreign assets, manage overseas income and gains, and return to the UK in a more controlled way.

Used poorly, or misunderstood, it could lead to missed reliefs, unexpected tax exposure, and rushed decisions.

At Atlas Bridge Wealth, our role is to help UK expats think through these decisions calmly, clearly and in the right order — before the move happens, not after.

Because with cross-border planning, the detail matters.

And when returning to the UK after years abroad, the first question should not simply be:

“When are we moving home?”

It should be:

“What needs to happen before we do?”

Important note: This article is for general information only and does not constitute personal tax, legal or financial advice. The FIG regime is complex and depends on individual residence history, asset structure, income sources and wider planning objectives. UK and local tax advice should be taken before making any decisions.