The UK FIG Regime and Its Effect on Your U.S. Tax Bill
The UK’s foreign income and gains (FIG) regime lets a qualifying new resident claim full relief from UK tax on foreign income and foreign capital gains for their first four tax years of UK residence. To qualify, you must be a UK tax resident who was not a UK tax resident for at least the 10 consecutive tax years before you arrived. The relief replaced the old non-dom remittance basis on 6 April 2025, and it is not automatic: you claim it on your Self Assessment return, one year at a time.
For an American in the UK, there is a second half to that answer that most UK guidance leaves out. Paying no UK tax on foreign income means no UK tax to credit against the U.S. tax on the same income.
This matters most if you:
- Arrived recently: your first Self Assessment return is due soon.
- Hold investments outside the UK: a U.S. brokerage producing dividends or gains is the common case, and the one where the U.S. side matters most.
- Earn above £100,000: where the allowance is already tapering, so claiming costs you less.
- Have foreign income that swings year to year: you decide again every year.
Below is what the relief covers, what it costs, how it lands on your Form 1040, and the two figures that decide whether to claim.
The FIG Regime Replaced the Remittance Basis on 6 April 2025
Before 6 April 2025, a UK resident who was not UK-domiciled could elect the remittance basis and pay UK tax on foreign income only when the money reached the UK. That system ended. HMRC now runs a residence-based regime with a four-year window for new arrivals, and the money can be brought in freely.
| Basis | Who it applies to | How foreign income and gains are taxed |
|---|---|---|
| Remittance basis (before 6 April 2025) | Non-doms electing each year | UK tax only when funds were remitted |
| FIG regime (from 6 April 2025) | Qualifying new residents | Relieved from UK tax for up to four tax years |
| Arising basis (default) | Every other UK resident | Taxed as it arises, remitted or not |
Once the four years are up, the arising basis applies, and your worldwide income is taxable in the UK as you earn it. The pre-arrival checklist covers the timing decisions that come first.
Who Can Claim FIG and for How Long
You are a qualifying new resident if you are a UK tax resident under the statutory residence test and were not a UK tax resident for at least the 10 consecutive tax years before your first year back. The window is that first year plus the three that follow, and it runs whether or not you claim.
How the four years are counted:
- Split years count in full: even the part you spent overseas.
- The clock does not reset: if you become non-resident in year two, you lose that year’s status, but if you come back in year three, you still spend year three of the four.
- The count is by UK tax year, which runs from 6 April to 5 April, so arriving either side of that date can change which year counts as your first.
What FIG Covers and What It Leaves Out
The FIG relief applies to foreign income and foreign capital gains. It does not cover foreign employment earnings, the gap that catches relocating employees, and it does not cover anything UK-sourced. Your UK salary, UK rental income, and UK gains stay taxable whether or not you claim.
Two further limits are easy to miss. In any year you claim, you cannot claim foreign income or capital losses, or carry them backward or forward. And the claim is annual, so a year with large foreign capital gains and a year with almost none can be answered differently.
Claiming FIG Costs You the Personal Allowance
A FIG claim is not free. In any tax year you claim, you give up the £12,570 Personal Allowance and the £3,000 Capital Gains Tax annual exempt amount, along with the Married Couple’s Allowance, Marriage Allowance, and Blind Person’s Allowance if you were entitled to them. The relieved foreign income also counts toward adjusted net income for the High Income Child Benefit Charge.
| What you give up | Amount | What it costs a higher-rate taxpayer |
|---|---|---|
| Personal Allowance | £12,570 | About £5,028 in extra UK tax at 40% |
| CGT annual exempt amount | £3,000 | Up to £720 at 24%, and nothing if you have no UK gains |
| Foreign losses | All of them, that year | No offset, no carry-back, no carry-forward |
The Personal Allowance decides most cases, because it is a fixed cost whether your foreign income was £4,000 or £400,000. Scotland sets its own bands, so the same comparison runs at a different marginal rate there.
Claiming FIG Removes the Credit That Offsets Your U.S. Tax
As a U.S. citizen or green card holder in the UK, you file a U.S. return on worldwide income wherever you live, and the Foreign Tax Credit normally keeps the same income from being taxed twice. It credits foreign tax paid. Claim FIG, pay no UK tax, and there is no credit to claim.
Money in a U.S. Brokerage Needs Re-Sourcing First
Income from a U.S. brokerage is U.S.-source, and U.S.-source income does not normally produce a foreign tax credit at all. UK-only guidance has no reason to raise it. The U.S.-UK treaty lets you re-source it so the UK tax you paid on it can be credited, and the IRS then wants a separate Form 1116 for that income plus a Form 8833 disclosure with the return.
That matters to both halves of the decision. Without the re-sourcing, the UK tax you paid has nothing to credit against, and the same income is taxed twice. The IRS also sets the credit limit separately for each category of income, so a full general-category basket from your UK salary cannot rescue an empty passive one.
Example: An £11,521 UK Saving Comes Out at About $600
Daniel moved from Chicago to Manchester and is a UK tax resident for the first time in a decade. He earns £70,000, which puts him in the 40% band and keeps him under the £100,000 taper. His U.S. brokerage produced $30,000 in qualified dividends and $20,000 in long-term gains, taxed at 15% in the U.S., which is £24,000 and £16,000 at $1.25 to the pound.
| Claims FIG | Does not claim | |
|---|---|---|
| UK tax on the foreign income | £0 | £11,521 |
| Personal Allowance given up | £5,028 | £0 |
| U.S. tax on the same income | $7,500, no credit available | $7,500, covered by the re-sourced credit |
| Approximate total | $13,785 | $14,401 |
For Daniel, the two columns are close to a wash, which is a long way from the £11,521 of UK tax his UK accountant would show him saving. Ordinary dividends in place of qualified ones, or a different exchange rate, and the columns swap places.
Change the income amount, and it swaps decisively. On £4,000 of dividends with the same gains, claiming costs him about $10,000 against roughly $5,500 for not claiming, because the allowance he gave up is worth far more than the UK tax he saved.
Overseas Workday Relief Covers the Earnings FIG Leaves Out
Overseas Workday Relief takes UK tax off earnings for duties performed outside the UK, capped since 6 April 2025 at the lower of 30% of your relevant qualifying employment income or £300,000 a year. It sits outside FIG, requires its own election each year, and depends on the same qualifying new-resident status.
If a U.S. employer relocated you and you still work outside the UK part of the year, this usually matters more than FIG, and the two are claimed separately.
The Temporary Repatriation Facility Covers Money Earned Before April 2025
The Temporary Repatriation Facility charges 12% on amounts designated in a 2025-26 or 2026-27 return, and 15% on amounts designated in a 2027-28 return, after which it closes. It is open to anyone who was taxed on a remittance basis before 6 April 2025 and still holds foreign income or gains from those years, and it brings that income in at the reduced rate.
One point deserves attention: Whether the TRF designation charge counts as creditable foreign income tax for U.S. purposes remains unsettled, and no IRS guidance addresses it directly. Treat the U.S. side as an open question to work through with your accountant.
How to Claim FIG on Your Self-Assessment Return
The claim is made on the SA109 supplementary pages, retitled “Residence and foreign income and gains (FIG) regime” for the new rules, which sit alongside the main SA100 return.
- Register for Self Assessment if you are not already in it, and file a UK Self Assessment return for the year.
- Tick box 28 on the SA109 to claim relief on your foreign income.
- Tick box 29 on the SA109 to claim relief on your foreign gains.
- Report the amounts on whichever supplementary pages apply, usually SA106 for foreign income and SA108 for capital gains.
- File the return online by 31 January, after the end of the tax year. The claim itself has a longer window: you have until the following 31 January, 12 months later, to make or amend it.
A UK-Only Calculation Overstates What Claiming Is Worth
The UK saving your accountant shows you overstates what claiming is worth, because it leaves out the U.S. tax that becomes payable once there is no UK tax left to credit. Two figures settle it. First, your net UK saving: the UK tax on your foreign income without the claim, less the Personal Allowance at your marginal rate, so £12,570 at 40% is £5,028. Second, the U.S. tax you pick up. Subtract the second from the first, and what remains is the real value of claiming.
Because UK rates are higher than U.S. rates on most income levels, the gap between the two is usually wide.
If you have already claimed on UK advice, this year is not closed. You have until 12 months after the normal filing deadline to amend the claim, so there is time to run both numbers first. Greenback’s UK tax services include a FIG assessment and the SA109 pages, prepared by a UK Chartered Accountant working with a U.S. CPA or Enrolled Agent.
Get a FIG Assessment That Counts the U.S. Side
Frequently Asked Questions
Four tax years: your first year as a qualifying new resident plus the three that follow. The window runs whether or not you claim, so a year you skip is a year you lose. Leaving partway through does not extend it.
Yes, in any year you claim. You give up the £12,570 Personal Allowance and the £3,000 Capital Gains Tax annual exempt amount, plus the Married Couple’s, Marriage and Blind Person’s Allowances if they applied. The claim is annual, so you can keep the allowance in any year you do not claim it.
Yes, citizenship has no bearing on eligibility. No UK tax paid means no UK tax to credit, so the U.S. tax on the Foreign Tax Credit would become payable. Whether the UK savings outweigh that depends on the size of your foreign income.
People who were taxed on a remittance basis before 6 April 2025 and still hold unremitted foreign income or gains from those years. Someone who arrived after the remittance basis ended has nothing to designate.
It refers to Private Residence Relief on a home, not to FIG. Absences from a property for any reason totaling up to three years still count as living there, along with any period spent working outside the UK and the last nine months of ownership. It matters if you later sell a former main home.
This article is for general information and is not personal tax advice. UK and U.S. tax rules are complex, change frequently, and apply differently to each person’s facts. The FIG regime and the Temporary Repatriation Facility are recent; HMRC guidance is still developing, and the U.S. treatment of the TRF charge is unresolved. Speak with a qualified adviser with expertise in both U.S. and UK tax before acting.
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