Navigating The New UK tax Landscape With Confidence For Internationally Connected Individuals
For internationally connected individuals, UK tax has always required careful thought, but from April 2025, the rules changed in a way that makes early, informed planning more important than ever.
Where once the focus was on domicile and where money was kept, the UK has now moved decisively to a residence-based system.
This represents a technical shift, with tax outcomes dependent on when you arrive, how long you stay, and how your international affairs are structured over time.
Understanding this new framework, and how it applies to your own circumstances, is the starting point for effective international tax planning.
A New Era: From Remittance Basis to Residence
For generations, the remittance basis shaped how internationally mobile individuals interacted with the UK tax system. Foreign income and gains could remain outside the UK tax net unless brought here.
From 6 April 2025, that approach came to an end.
The remittance basis has been withdrawn and replaced with a system that looks first and foremost at UK residence as determined under the Statutory Residence Test (SRT).
In simple terms, this means that anyone who remains UK resident will be taxed on their worldwide income and gains no later than their fifth year of UK residence, regardless of where assets are held or where income arises.
This change has brought clarity but also complexity. Structures, investments and arrangements that would previously have sat comfortably outside the UK tax net may now have been given a UK tax profile for the first time.
A Welcome Window: The 4-Year Foreign Income & Gains (FIG) Regime
Recognising the UK’s continued reliance on international talent and investment, the government introduced a transitional measure for new arrivals: the 4-year Foreign Income & Gains (FIG) regime.
The UK offers a valuable period of relief for individuals who:
- become UK tax resident on or after 6 April 2022
- and have not been UK resident in any of the 10 tax years immediately preceding their arrival.
With effect from 6 April 2025, during the first four years of UK residence, eligible foreign income and gains can benefit from 100% UK tax relief. Importantly, those income and gains can also be brought into the UK without triggering a UK tax charge.
For many individuals, this creates a genuine opportunity — a defined period in which to organise international affairs, realise gains, restructure investments or bring capital to the UK efficiently.
That said, the regime is not automatic. Claims must be made in the tax return, relief applies on a source-by-source basis, and there are trade-offs — including the loss of the Personal Allowance and the capital gains annual exemption in years when claims are made.
Used well, the FIG regime can be highly effective, but without expert advice, it can be easily misunderstood.
Life After Year Four: Worldwide Taxation
The FIG regime does not last indefinitely.
From the fifth year of UK residence, individuals - regardless of domicile - are subject to UK tax on their worldwide income and gains as they arise.
At this point, the UK’s anti-avoidance rules take on greater significance. Income and gains arising within offshore trusts, companies or other entities may be attributed to UK-resident individuals, unless it can be demonstrated that the arrangements were established for genuine commercial reasons rather than tax avoidance.
This is why the early years of residence matter so much. Decisions taken - or not taken - before worldwide taxation begins can have lasting consequences.
For Those Who Were Previously Non-Dom
For individuals who were already UK resident and had claimed the remittance basis before April 2025, the transition requires particular care.
While the new FIG regime does not apply to income and gains that previously benefited from the remittance basis, the legislation provides a series of transitional measures to ease the change.
These include:
- a capital gains tax (CGT) rebasing opportunity for certain non-UK assets,
- and the Temporary Repatriation Facility, which allows previously untaxed foreign income and gains to be brought to the UK at reduced rates for a limited period.
These provisions recognise that many individuals have built up offshore wealth over decades, and are intended to encourage those individuals to bring that wealth into the UK in exchange for a concessionary tax rate as low as 12%.
Working Across Borders: Overseas Workday Relief
International careers remain a feature of modern working life, and Overseas Workday Relief (OWR) continues to play an important role.
From April 2025, OWR was redesigned to align with the new residence-based system:
- Eligibility is now determined by residence, not domicile
- Relief is available for up to four years
- It applies to employment income relating to duties performed outside the UK
- The qualifying overseas employment income can be remitted to the UK without a tax charge
While the mechanics remain familiar, typically based on workday apportionment, a new annual cap applies, limiting relief to the lower of £300,000 or 30% of qualifying employment income.
For internationally mobile employees, OWR can still provide meaningful tax savings, but only where elections are made correctly and records are maintained throughout the year.
Will Johnstone, Partner at MHA
Capital Assets and Rebasing: Looking Back To Move Forward
The transition away from the remittance basis also introduced a practical capital gains measure.
Individuals who previously claimed the remittance basis may be able to rebase the cost of certain non-UK assets to their value at 5 April 2017, when those assets are disposed of on or after 6 April 2025.
For assets that have appreciated significantly over time, this can materially reduce UK capital gains tax, but only where the detailed conditions are met.
This is not a decision to leave until disposal is imminent. Reviewing asset histories early allows opportunities to be identified and acted upon deliberately.
Bringing Funds to the UK: The Temporary Repatriation Facility
The Temporary Repatriation Facility (TRF) is one of the most time-sensitive elements of the new regime.
For individuals previously taxed on the remittance basis, the TRF allows foreign income and gains arising before 6 April 2025, which previously benefited from the remittance basis, to be designated and taxed at:
- 12% in 2025/26 and 2026/27, or
- 15% in 2027/28.
Once designated and taxed, these amounts can be brought to the UK at any time in the future without further UK tax.
This provides flexibility, but only for a limited window. Decisions around designation, funding, and interaction with mixed funds require careful handling.
Pre 6 April 2025, FIG that benefited from the remittance basis that is not designated remains taxable at the full rates when remitted to the UK.
Inheritance Tax: Residence Now Takes Centre Stage
Inheritance tax is another area where the shift to residence has far-reaching implications.
From April 2025:
- UK assets remain within the scope of inheritance tax regardless of residence,
- Non-UK assets fall into scope once an individual has been UK resident for 10 out of the previous 20 tax years.
This “long-term resident” concept replaces domicile and means that exposure to UK inheritance tax on non-UK assets can arise sooner than expected, and persist even after leaving the UK, in some cases for as long as ten years.
For families with international wealth and cross-border succession plans, this change reinforces the need for forward-looking estate planning.
The new regime also brings previously Excluded Property Trusts into the IHT net where the settlor is a long-term resident.
What the Autumn Budget 2025 Confirmed
The Autumn Budget 2025 did not alter the fundamental structure of the international tax regime introduced earlier in the year.
The government confirmed its intention to allow the new residence-based system, including the FIG regime, Overseas Workday Relief, inheritance tax rules and transitional facilities, to operate as legislated, with only technical clarifications where needed.
For clients, this provides a degree of certainty: the framework is now in place, and planning can proceed on a stable footing. Reliefs such as APR and BPR require ongoing attention. A change in business activity, ownership structure, or asset mix may affect eligibility.
International tax planning is no longer something to revisit only when circumstances change or a return is due. It now requires:
- An understanding of how residence evolves over time,
- Awareness of how early-year decisions affect later exposure,
- Ongoing monitoring of income, gains and structures,
- And timely advice before key moments: arrivals, departures, disposals or remittances.
With the right guidance, the new rules offer structure and opportunity. Without it, complexity can quickly turn into risk.
Will Johnstone
Tax Partner at MHA