FIG Relief and Global Mobility

However, as the first tax returns under the new rules begin to be filed, both individuals and employers need to understand not only the opportunities available but also the risks of getting claims and reporting requirements wrong.

A New Approach to Attracting Global Talent

The FIG regime replaces the long-standing non-domicile system and shifts the focus from an individual’s domicile status to their period of UK tax residence.

Elisa Sofocli, Global Mobility Partner, explains:

The UK’s FIG regime was designed to attract internationally mobile talent to the UK. But some individuals do not fully understand the reliefs available to them, how claims need to be made, or the now complex reporting requirements involved – which could create unexpected tax costs if the relief is not claimed correctly or on time through their UK tax filings.

Under the new rules, qualifying individuals can claim relief on foreign income and gains during their first four consecutive years of UK tax residence, creating a potentially valuable tax-saving opportunity for those relocating to the UK.

Understanding the Reliefs Available

The FIG regime, which came into force 6th April 2025, allows qualifying individuals residing in the UK to claim tax relief on their foreign income and gains for up to their first four consecutive tax years of residence.

Internationally mobile individuals need to take full advantage of this regime and its flexibility. For example, taxpayers can claim relief on foreign income and/or foreign gains. Additionally, Overseas Workday relief (OWR), which provides relief from UK tax on employment income performed outside of the UK, remains available under the new regime, albeit with revised conditions. Individuals who expect to receive compensation in future tax years that relates to earlier periods of employment should consider whether elections need to be made in their current tax return filings to preserve eligibility for relief in later years.

This highlights a key feature of the new framework: tax planning decisions may need to be made well in advance. Missing an election or failing to claim relief within the required timeframe could lead to permanent loss of tax benefits.

Why Employers Should Pay Attention

Employers have an important role to play. Understanding the new rules can help organisations use the regime as part of their talent attraction strategy while ensuring employees receive the support needed to claim relief correctly. Getting this wrong can be costly for both employee and employer. Reliefs that are not properly claimed or reported may be denied, potentially resulting in significant and unexpected tax liabilities.

For businesses with globally mobile workforces, this reinforces the importance of reviewing assignment policies, payroll processes and employee communication to ensure individuals understand their obligations.

Changing Behaviour and Mobility Decisions

The introduction of a four-year relief limit has created some consequences. Some individuals are reassessing the length of time they intend to remain in the UK, while others have accelerated plans to leave or have already left the UK. For some internationally mobile employees, the reduced duration of the relief changes the economics of a longer-term move.

For employers, this could affect workforce planning, particularly for roles that require international expertise over longer periods.

A Simpler System But More Reporting

However, in many respects, the FIG regime represents a positive development. By removing domicile as a key determinant of UK tax treatment, together with the need for complex offshore bank account structuring, the new rules potentially provide a clearer and more straightforward framework for internationally mobile individuals. The regime also supports the Government’s broader objective of maintaining the UK’s attractiveness as a destination for global talent. Importantly, it also encourages individuals to bring foreign income and gains into the UK and spend or invest those funds here without the tax barriers that existed under the previous regime.

However, simplification in one area has been accompanied by greater compliance requirements in another.

The trade-off is a significantly increased compliance burden, with more extensive reporting requirements than under the previous regime. Individuals must now report their worldwide income and gains in order to correctly claim reliefs available under the FIG regime.

This means accurate record-keeping and timely tax reporting are now more important than ever.

Will the Regime Achieve Its Goal?

The long-term success of the FIG regime will depend on whether it strikes the right balance between competitiveness and compliance.

Elisa concludes:

The success of the FIG regime will ultimately be measured not only by how simple the rules are to follow, but by whether they achieve their primary objective: attracting and retaining international talent in the UK.

For now, the opportunity remains significant. But maximising the available benefits requires careful planning, a clear understanding of the rules and proactive action by both individuals and employers.

What You Should Consider Next

For internationally mobile individuals

Review whether you qualify for FIG relief and understand the four-year eligibility period.

Assess whether claims for foreign income, foreign gains and Overseas Workday Relief are available.

Ensure all required elections and claims are made within the relevant filing deadlines.

Maintain detailed records of worldwide income and gains to support relief claims.

Seek professional advice if you have complex international income sources or future compensation arrangements.

For employers

Review global mobility policies in light of the new FIG regime.

Ensure employees relocating to the UK receive appropriate tax guidance and support.

Consider how the new rules may affect recruitment, retention and assignment planning.

Assess payroll and reporting processes to identify potential compliance risks.

Use the regime strategically as part of your international talent attraction proposition while helping employees avoid costly mistakes.

Would you like to know more?

If you would like to discuss this in more detail, please get in touch with your usual Blick Rothenberg contact or Elisa Sofocli using the form below.