This article was first published here.

Replacing the remittance basis and moving to a residence-based framework, the regime provides valuable tax relief opportunities for qualifying new arrivals to the UK, but careful planning remains essential.

Under the new rules, individuals who have been non-UK resident for at least ten consecutive tax years before moving to the UK may claim exemption from UK tax on qualifying foreign income and gains for up to their first four tax years of UK residence. Unlike the previous remittance basis, exempt foreign income and gains can generally be brought to the UK without creating an additional tax charge.

However, the headline four-year exemption is only part of the story. Eligibility conditions, reporting requirements and the interaction with other reliefs can significantly affect the outcome.

Overseas Workday Relief and Deferred Remuneration

Overseas Workday Relief (OWR) remains available under the new regime and can provide substantial tax savings for internationally mobile employees. However, the rules are more complex than many individuals appreciate.

Particular care is required where deferred remuneration arrangements are involved, including bonuses, share plans and long-term incentive awards. In many cases, the taxable event may occur several years after the underlying services were performed. Importantly, entitlement to relief may depend on claims and elections being made in earlier tax years, well before the income is received. Missing these elections could significantly reduce the relief available.

This is likely to be one of the key risk areas for internationally mobile employees and employers. Robust tracking of deferred compensation arrangements and early review of filing obligations will be critical.

The Importance of Early Claims and Elections

The first self-assessment returns filed under the new regime are particularly important. Claims and elections made in the early years may affect the availability of reliefs in later years, especially where OWR and deferred remuneration are concerned.

Individuals will also need access to detailed information regarding their worldwide income and gains, and foreign tax reporting information will not always align with UK tax rules. Early preparation can help avoid missed opportunities and compliance issues.

Looking Beyond the Four-Year Relief

While much attention has focused on the income tax and capital gains tax benefits available under the FIG regime, longer-term inheritance tax implications may be equally important for many individuals and families considering a prolonged stay in the UK. The move to a residence-based inheritance tax framework means that long-term planning should form part of any relocation strategy.

The new regime presents significant opportunities for internationally mobile individuals and their employers, but the benefits will only be fully realised where claims, elections and reporting obligations are managed correctly from the outset.

How We Can Help

The implications of the new regime extend well beyond individual taxpayers. Employers may need to revisit mobility policies, employee support programmes, payroll processes and talent strategies to ensure they remain aligned with the new rules.

Our Global Mobility team combines deep technical expertise with practical experience advising internationally mobile individuals, executives and employers on complex cross-border tax matters. With one of the UK’s largest teams of UK/US dual-handling specialists, enabling us to provide joined-up advice on both sides of the Atlantic and support globally mobile populations with increasingly complex international tax requirements.

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.