The United Kingdom has long been a popular destination for globally mobile professionals and families. London remains a financial and cultural hub; the education system is a draw for internationally minded families; and for Americans, the shared language and familiar legal framework often make the transition feel easier than other European moves.

Starting April 6, 2025, however, the tax landscape for new arrivals underwent a fundamental change. The UK replaced the long-standing remittance basis regime with a new foreign income and gains (FIG) regime. The shift moves the UK toward a residence-based system rather than one anchored in domicile, and it reshapes how foreign income, foreign gains, and offshore planning are treated for new UK residents.

For US expats and returning UK citizens, the FIG regime can create a rare and valuable planning window, but only if it is used deliberately. The most favorable outcomes typically depend on decisions made before UK tax residence begins, not after.

Understanding the FIG regime

The FIG regime is available to qualifying new UK residents, which broadly means individuals who become a UK tax resident after at least 10 consecutive UK tax years of nonresidence. It can also apply to individuals who became a UK resident before April 6, 2025, but are still within their first four UK tax years and have remaining eligibility.

For those who qualify, the regime provides up to four UK tax years during which foreign income and foreign capital gains are exempt from UK tax. Unlike the old remittance basis, the exemption does not depend on keeping funds offshore. Foreign income and gains can be brought into the UK during the qualifying period without triggering UK tax simply because the money is remitted.

What the FIG regime does not do is eliminate tax elsewhere. US citizens remain taxable in the United States on worldwide income. FIG is a UK tax concept, and its benefits must be coordinated with US federal tax, US state tax, and treaty outcomes.

Importantly, FIG is not automatic. It must be claimed annually, generally through UK Self Assessment. Foreign income and gains still need to be identified, quantified, and reported, even if UK tax is assessed.

Claiming FIG comes with trade-offs. In the year you claim, you generally lose the UK personal allowance and the Capital Gains Tax annual exempt amount, and certain foreign losses are restricted, so it’s worth running the numbers rather than assuming FIG is always optimal.

Why timing matters more than most people expect

The UK tax year runs from April 6 to April 5 of the following year. Your first year of UK tax residence is generally treated as year one of the four-year FIG window. As a result, the timing of a move becomes a critical planning decision.

A relocation in late March versus mid-April can change which income events fall inside the FIG period, how many full years are available, and whether certain transactions occur before or after UK residence begins. Determining when UK tax residence starts under the Statutory Residence Test, and aligning travel and move dates accordingly, is often one of the highest-impact planning decisions in the entire process.

Decisions that are best made before UK residence

The FIG regime rewards preparation. Before UK tax residence begins, several planning areas deserve careful attention.

Eligibility confirmation comes first. This includes validating the 10-year nonresidence requirement and reviewing historic UK travel patterns that could unintentionally trigger an earlier year of UK tax residence.
Next comes sequencing major financial events. For many US expats, the tax outcome is driven by one or two large items, a concentrated investment position, equity compensation, a business interest, or accumulated unrealized gains. The key question is rarely whether to transact before or after the move in isolation, but which jurisdiction will tax the event and how residence timing changes that answer.

For US citizens, retirement planning often sits at the center of this analysis. The US–UK income tax treaty uniquely recognizes Roth IRAs, preserving their tax-free character in the UK when structured and distributed correctly. As a result, Roth IRAs can be an exceptionally powerful planning tool for Americans relocating to the UK.

Roth conversions, however, are highly sensitive to timing. Completing conversions before UK tax residence begins can prevent the conversion income from being exposed to UK tax, but the optimal approach varies based on overall income levels, US marginal tax brackets, and state income tax exposure. In some cases, deferring or staging conversions within the FIG window may be more effective, particularly when coordinated with reduced income years or a change in state residency.

Similar considerations apply to inherited IRAs subject to the US 10-year distribution rule. Large required distributions may be better managed outside UK residence, or intentionally timed within the FIG period, depending on income stacking, US tax rates, and long-term plans. Thoughtful sequencing of retirement income can materially improve outcomes and avoid unnecessary tax friction once UK worldwide taxation applies.

Investment portfolios also deserve early review. FIG lasts only four years. If a move to the UK may extend beyond that period, years one through four provide an opportunity to simplify holdings, realize gains strategically, and reposition portfolios with the UK’s reporting fund rules in mind. Ensuring that funds are UK reporting funds, or transitioning away from non-reporting holdings, can materially reduce future tax friction and reporting complexity. Used well, the FIG window allows portfolios to be “UK-proofed” so that year five does not force rushed or expensive changes once full UK worldwide taxation applies.

Structures should be reviewed early as well. US trusts, LLCs, S corporations, and layered holding entities are often poorly aligned with UK tax rules. UK anti-avoidance and attribution regimes can apply even during the FIG period, and restructuring is generally more flexible before UK residence begins than after.

Case study: A married couple moving to the UK

Mark and Sarah, both in their late 50s and recently retired, relocate from Florida to London. Mark is a US citizen, and Sarah holds dual US and UK citizenship. They plan to live in the UK for at least four years, with the flexibility to stay longer.

Their assets include taxable investment accounts with significant unrealized gains, traditional IRAs and Roth IRAs for both spouses, and an inherited IRA in Mark’s name with a remaining eight-year distribution window.

Before the move, they begin Roth conversions while still US-only residents, taking advantage of lower-income retirement years and avoiding UK tax on conversion income. Roth planning continues selectively during the FIG period, with conversions sized based on US marginal rates and overall income. At the same time, they start realizing gains and repositioning their portfolio, a process that continues after UK residence begins during the FIG window, allowing a gradual transition toward UK reporting funds.

Distributions from Mark’s inherited IRA are coordinated across pre-move and FIG years, smoothing income and avoiding large withdrawals once UK worldwide taxation applies. Their US revocable trust is unwound before UK residence begins, eliminating future UK tax issues.

During each FIG year, planning decisions are revisited deliberately rather than assumed. By the middle of year three, the focus shifts to year five, helping ensure portfolio structure, retirement income, and long-term planning are aligned before the FIG window closes.

Transitional rules and former remittance basis users

For individuals who previously used the remittance basis, the UK introduced a Temporary Repatriation Facility. In broad terms, this allows certain historic foreign income and gains to be designated and taxed at reduced flat rates, commonly cited as 12% for earlier years and 15% later. The opportunity is time-limited and documentation-sensitive.

Inheritance tax and long-term planning

The UK has shifted inheritance tax toward a residence-based framework, which has important implications even for individuals who initially view a UK move as temporary. Under current rules, individuals who are UK residents for at least 10 of the previous 20 tax years can become subject to UK inheritance tax on their worldwide estate, not just UK-situated assets.

Once this threshold is reached, UK inheritance tax generally applies at a 40% rate on assets above the available nil-rate bands. Each individual typically has a £325,000 nil-rate band, with a potential additional residence nil-rate band of up to £175,000 when passing a qualifying UK home to direct descendants. For married couples or civil partners, unused allowances may be transferable, resulting in a combined threshold of up to £1 million before inheritance tax applies. For contrast, the US estate tax applies at significantly higher asset levels. Under current US rules, each individual has a federal estate and gift tax exemption of approximately $15 million, resulting in a combined exemption of roughly $30 million for a married couple. Only assets above that threshold are subject to US estate tax, generally at rates up to 40%.

An additional consideration is the inheritance tax “tail.” Even after leaving the UK, individuals who have become long-term residents may remain within the UK inheritance tax net for several years, meaning global estate exposure does not necessarily end when UK residence does.

The practical takeaway is that UK relocation planning should preserve optionality. Even when a move is intended to be temporary, estate and wealth planning should allow for the possibility that plans evolve, and long-term residence can carry lasting inheritance tax consequences.

More broadly, the FIG regime rewards intentional planning. The four-year window is meaningful but finite. Used thoughtfully, it allows US expats and returning UK citizens to reposition assets, manage income timing, and simplify structures in a measured and controlled way. Used reactively, it can close before its value is fully realized.

With careful pre-move planning, coordinated US and UK advice, and a clear strategy for life after year four, the FIG regime can serve as a powerful planning opportunity rather than an unwelcome surprise. To learn more about cross-border planning, reach out to your Cerity Partners advisor or request an introduction today.

Please read important disclosures here.