Foreign Income and Gains (FIG) Regime: What’s New
From 6 April 2025, the UK ended the traditional remittance basis system and introduced the Foreign Income and Gains (FIG) regime for non-UK domiciliaries. Now, income and gains earned abroad are taxed on a arising basis—not just when funds are brought into the UK.(assets.publishing.service.gov.uk) This means timing and understanding of when you became UK resident matters a lot.
Statutory Residence Test (SRT) & Split Year Treatment
- The Statutory Residence Test (SRT) still governs your residency status—it looks at days in UK, connections, ties, etc. |
- Split-year treatment may apply if you arrive or leave partway through a tax year. This often gives partial UK tax liability. |
- Examples:
- If you spend fewer than 91 days in the UK and keep fewer than 30 workdays, you may avoid full tax residence. |
- Arriving in October 2025—first half tax year non-resident, then resident for remaining months, applied via split year. |
Double Taxation Agreements (DTAs) & Reverse Hybrids
- Consult UK DTAs to reduce double taxation—many treaties provide credit relief. |
- Recent consultations are looking at reverse hybrid entities, including US LLCs, which might have been taxed at effective rates over 75% due to mismatches. Reforms aim to remove these double-tax scenarios.(gov.uk)
Practical & Tactical Steps for Digital Nomads
- Map your physical locations to SRT days precisely. Poor tracking could result in unexpected UK residence status. |
- Identify global income sources now. Under FIG, foreign gains you used to hold offshore get taxed when they arise. |
- Check treaty provisions. If your country of residence / work has a DTA, know what reliefs or tax credits are available. |
- Plan finances for UK arrival. If moving to the UK, try to minimise transition income before becoming UK resident so exposure starts cleanly. |
- Cover National Insurance obligations. Being non-resident doesn’t always mean NI exemption; arrangements exist for some overseas directors and mobile individuals.(gov.uk)
Example Scenarios
- A remote worker based in Dubai earning foreign-sourced consulting income now must include it in their UK tax returns once resident—even if the money remains offshore. |
- A US LLC owner entering a reverse hybrid entity may see double taxation due to current mismatches—if reforms pass, those effects could be mitigated. |
Summary
The FIG regime and changes around DTAs & reverse hybrids have reshaped how digital nomads are taxed in the UK. To optimise your tax position, track residency carefully, anticipate arising-basis taxation of foreign income, and stay alert to upcoming policy reforms reducing unfair double taxation.