Returning from the US: why the FIG regime creates a valuable planning window

The last few years has seen a lot of movement both to and from the US; one trend has been British individuals returning to the UK after often decades of living and working in the US.

For these individuals, the FIG regime offers a great opportunity – no UK tax on foreign income and gains for up to four tax years – a window of opportunity to realise income and gains often without the burden of state taxes or UK tax. For individuals returning from California or New York in particular, this is likely to be the lowest tax burden they have had in years or may ever have. After this four-year window, UK tax is due on worldwide income and gains.

In their FIG eligible years, we may see individuals take distributions from US pensions, sell non-UK property and realise gains on funds that will be taxed disadvantageously once regular UK taxation resumes. Individuals may look to purge their investment accounts of non-reporting funds, which attract a tax rate of up to 45%, or save tax by realising gains before they are in the UK tax net.

If you’re returning to the UK after living in the US, early planning can help you make the most of the FIG regime. Speak to our UK/US tax specialists about what to consider before and during your first four years back in the UK.