The FIG Regime: Why Offshore Disclosure Has Changed Significantly
The abolition of the remittance basis from April 2025 represented one of the biggest changes to UK international tax rules in decades. The reforms form part of the wider non-dom tax changes introduced from April 2025.
Recently, much of the discussion surrounding the reforms has focused on the four-year Foreign Income and Gains (FIG) relief available to qualifying new residents arriving in the UK. However, what has received far less attention is the reporting side of the regime.
Under the previous remittance basis system, offshore income and gains often remained outside HMRC reporting requirements if they were not brought into the UK. For many internationally mobile individuals, particularly those with offshore investment portfolios or overseas property interests, the regime offered a degree of privacy alongside tax efficiency.
As we now know, the foreign income and gains relief system operates very differently.
While the new rules may still provide valuable relief for qualifying individuals, HMRC’s disclosure expectations are now significantly greater than under the old regime. In many cases, clients fully appreciate this only when they begin preparing their first tax return under the new rules.
Background to the foreign income and gains relief rules
The foreign income and gains relief regime was introduced from 6 April 2025 alongside the abolition of the remittance basis of taxation. Broadly speaking, the UK has moved away from a domicile-based system towards one that is far more heavily based on residence.
Under the new framework, qualifying new residents may claim relief on certain foreign income and gains arising during their first four years of UK residence. To qualify, an individual must generally have been a non-UK resident for at least 10 consecutive tax years before becoming a UK resident again.
Where relief applies, qualifying foreign income and gains can usually be brought into the UK without an additional UK tax charge. That remains one of the more attractive features of the regime for internationally mobile individuals and families relocating to the UK.
At first glance, the rules may appear relatively straightforward. In practice, however, the compliance and reporting obligations are considerably more detailed than many clients expect.
The major change: Worldwide reporting and disclosure
The most significant practical difference between the old remittance basis and the FIG regime is the level of disclosure.
Under the remittance basis, foreign income and gains that remained offshore often did not need to be fully reported to HMRC. For many non-domiciled individuals, this created a relatively contained reporting environment, particularly where offshore income was retained outside the UK.
The FIG regime changes that position considerably.
Foreign income and gains generally need to be identified and reported as part of the UK Self Assessment process where relief is claimed, even where no UK tax ultimately becomes payable. Claims are also made on a source-by-source basis rather than through a broad exemption mechanism.
In practical terms, this may involve reporting:
- Overseas bank interest
- Foreign dividends
- Offshore investment portfolio income
- Rental income from overseas properties
- Gains on foreign share disposals
- Certain trust distributions
For clients with multiple accounts, investment platforms or international structures, the reporting exercise can become significantly more detailed than under the previous regime.
Importantly, the relief itself may remove the UK tax charge, but it does not remove the reporting requirement. That distinction is becoming increasingly important.
Many offshore structures and investment arrangements were originally established during a period when disclosure expectations were materially lower. The UK tax system has now moved much closer towards full transparency of overseas income and gains.
Why this matters more than some clients realise
The practical challenges posed by the FIG regime are not always obvious at first.
Many internationally mobile individuals have historically organised their affairs around the old remittance basis rules. As a result, records, investment structures and reporting systems may not have been designed with detailed UK disclosure requirements in mind.
This can create difficulties where individuals now need to:
- Identify multiple offshore income sources
- Separate different categories of foreign income and gains
- Reconcile overseas reporting periods with UK tax years
- Calculate foreign currency conversions accurately
- Coordinate information between advisers across several jurisdictions
Some clients may incorrectly assume that if foreign income is exempt from UK tax under the FIG regime, there is nothing to report. Under the new system, that assumption can quickly create problems.
At the same time, HMRC continues to expand its focus on offshore compliance and international reporting consistency. The department already receives large volumes of overseas financial information through international information-sharing agreements and increasingly uses digital analysis to identify inconsistencies between returns, accounts and offshore data.
This wider direction of travel is difficult to ignore. The UK tax system has become far more transparent in recent years, particularly regarding offshore wealth and international structures.
The wider planning implications
Although the FIG regime offers valuable planning opportunities in certain situations, making a claim is not always as straightforward as many clients initially assume. A FIG claim can affect several allowances and reliefs, including:
- Personal allowance entitlement
- Capital gains tax annual exempt amount
- Certain foreign losses
- Relief for finance costs relating to overseas property income
The position can become more complicated where clients have multiple sources of foreign income or gains, or where overseas tax rules interact with UK reporting obligations.
In some situations, a partial claim may prove more beneficial than claiming relief on every source of foreign income. In others, the administrative burden associated with reporting may itself become a significant consideration.
Coordination between UK advisers and overseas professionals is also becoming increasingly important, particularly for clients with:
- International investment portfolios
- Overseas businesses
- Trusts
- Foreign property holdings
- Family wealth structures spanning several jurisdictions
The regime is not simply a “claim and forget” exercise. Ongoing review is likely to become increasingly important as HMRC guidance and international reporting standards continue to develop.
Which clients are most likely to be affected?
The FIG regime is particularly relevant for:
- Non-doms previously using the remittance basis
- Returning UK residents
- Internationally mobile executives
- Entrepreneurs relocating to the UK
- Offshore investors
- Clients with overseas property portfolios
- Beneficiaries of offshore trusts
Even relatively straightforward offshore arrangements may now involve a much greater degree of reporting analysis and disclosure than under the previous system. For some clients, the compliance burden may ultimately outweigh the immediate UK tax exposure.
Conclusion
Foreign income and gains relief still offers potentially valuable opportunities for qualifying new residents arriving in the UK. However, the reporting framework surrounding offshore income and gains has changed considerably since the abolition of the remittance basis.
The days of relatively limited offshore disclosure have largely disappeared. Transparency, reporting accuracy and international information sharing now sit much closer to the centre of the UK international tax system.
For internationally mobile individuals, effective planning increasingly involves not only managing tax exposure, but also ensuring offshore reporting is complete, consistent and properly documented.
At Wilkins Southworth, we advise internationally mobile individuals and families on offshore reporting, residence issues and wider international tax planning. If you would like to discuss how the FIG regime may affect your circumstances, please feel free to contact our team.