Employers who offer tax support to their employees should consider the implications of the FIG regime

From 6 April 2025, individuals who have been non-UK resident for 10 tax years prior to UK arrival will be eligible for the new Foreign Income and Gains (FIG) regime for the first four years of UK residence.

It will apply to new arrivals to the UK from 6 April 2025 onwards and will also largely apply to individuals who are already in the UK as of 6 April 2025 but who meet the above conditions, although there will be complicated transitional rules to consider.

Will your tax support package still be fit for purpose?

An exemption claim under the FIG regime will be more complex. Unlike the remittance basis claim, the foreign income and gain that is exempt from tax will need to be declared on the tax return. An incorrect claim can be rejected by HMRC.

Employees who are already in the UK but who qualify for the new FIG regime will have to grapple with complicated transitional rules and may require additional assistance to manage this.

UK resident spouses of employees will have to file a UK tax return to make a claim under the FIG regime and report their worldwide income and gains.

What is covered under your tax equalisation policy?

If you have a tax equalisation policy, it should be reviewed to factor in who is responsible for the UK taxes on non-UK personal sources of income and gains:

• when an employee ceases to satisfy the criteria to claim an exemption under the FIG regime
• of the spouse of an employee
• should HMRC reject a FIG exemption claim on a tax return

To make matters more complicated, the deadline to make a claim is by 31 January in the 2nd tax year, after the year to which the claim relates. E.g. For the 2025/26 tax year, the deadline to make a claim is by 31 January 2028. This can represent a risk as HMRC may challenge a claim on a tax return after an employee is not on assignment in the UK or is no longer employed by you.

Will you benefit from a review and advice on your expenses policy?

Under the FIG regime, the exemptions available for certain expenses will change.

A positive change is that benefits-in-kind, such as ‘home leave’ travel, will now be considered as tax-exempt to any individual who qualifies for ‘FIG’ including UK nationals & their families.

How can we help you prepare for the upcoming challenges?

It is possible to tailor a solution that fits your budget. In our experience a combination of any of the following works to manage the risks and ensure your employees are supported.

1. We can review your population of employees who receive tax support to advise you on whether the level of support in place will be appropriate.
2. We can arrange a tax consultation with each employee to discuss their complex set of circumstances and their reporting obligations. This will also enable you identify any tax optimising opportunities and manage any additional costs associated with an assignment to the UK.
3. We can put together a bespoke FAQ for your employees to help address some of their questions.
4. We can deliver a workshop for your HR teams to talk about the upcoming new expat regime and provide them with tools to help them identify and manage risks.
5. We can review your tax equalisation/expenses policies to ensure they are fit for purpose going forward.

If you currently do not have a tax support package in place but would like to put one in place, we can help you design and implement a package.

Would you like to know more?

If you have any questions about the above, please get it touch with your usual Blick Rothenberg contact or Vanesha using the form on this page.