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UK Tax Changes: How the FIG Regime Impacts British UAE Expats

When the UK replaced the long-standing remittance basis with the Foreign Income & Gains (FIG) regime on 6 April 2025, many British expatriates breathed a sigh of relief. The rules promised simplicity and the ability to bring overseas money into the UK without triggering tax. Six months on, the new regime is no longer theoretical; it’s the law. For high-net-worth individuals (HNWIs) living in the UAE or wider Gulf, understanding how FIG works in practice is essential for preserving wealth and planning a potential return to the UK.

By Yazmin Boden, Senior Partner – GSB Wealth. With expert technical review by Richard Watts Joyce, GTN UK.

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How the FIG Regime Impacts British UAE Expats

Why the FIG regime matters to UAE-based Expats

The old remittance basis allowed non-domiciled UK residents to shelter foreign income and capital gains for up to 15 years, provided they kept the funds offshore and paid an annual charge after seven years of residence. FIG swept that away: all UK residents are now taxed on worldwide income and gains, but qualifying new residents, those who have been non-UK residents for at least ten consecutive tax years, can claim an exemption for up to four tax years (Source: GOV.UK – FIG Regime). During those four years, most foreign income and gains can be received in the UK tax-free (Source: HMRC – FIG Guidance).

We recently explored how the UK’s proposed pension inheritance tax changes could affect UAE expats. You can read that article here.

Pension Inheritance Tax Changes 2024: QNUPS and IUL

Taken together, these reforms underline the importance of reviewing your cross-border tax planning sooner rather than later

For UAE-based expats, this is significant because many clients intend to return to the UK at some point. The FIG window offers an opportunity to repatriate assets and restructure wealth before becoming fully taxable again. However, it is much narrower than the 15-year window under the remittance basis, so planning has become more urgent.

Who can use the FIG regime?

You are a qualifying new resident if:

  • You become a UK resident and have been a non-UK resident for at least ten consecutive tax years (Source: HMRC – FIG Eligibility). Split year rules count a part year as a full tax year (Source: HMRC – Split Year Treatment).
  • The tax year in question falls within your first four years of UK residence (Source: HMRC – FIG Eligibility). The four years are fixed and cannot be rolled over if you leave the UK and return (Source: HMRC – FIG Eligibility).
  • Your domicile or previous use of the remittance basis is irrelevant (Source: HMRC – FIG Eligibility).

If you’re unsure whether you qualify or how the FIG regime could interact with your existing offshore structures, our advisers can help you map out the options before your four-year window closes. Get in touch with us.

FIG is not available to people who were UK residents at any time during 2015/16–2021/22. (Source: GTN UK – Foreign Income and Gains Regime). Those who returned to the UK in 2022/23 or later can still have some years left of their four-year window. (Source: HMRC – FIG Guidance).

What income and gains qualify?

HMRC and professional advisers list a broad range of relievable foreign income and gains. According to professional tax sources, the FIG regime covers foreign employment income (capped at the lower of £300,000 or 30 % of total employment income), profits from trades carried on wholly overseas, rental income from non-UK property, most foreign pension income, foreign bank interest, dividends from non-UK companies, royalties, offshore income gains and capital gains on foreign assets that do not derive at least 75 % of their value from UK land.
(Sources: HMRC – Foreign Income & Gains Guidance; GTN UK – Foreign Income and Gains Regime)

According to HMRC’s Cryptoassets Manual, cryptocurrency gains are taxed under the UK’s normal income or capital gains tax rules and may be treated as UK-sourced for UK residents, meaning they are unlikely to benefit from the FIG regime’s foreign income/gains exemption unless very specific conditions are met (Source: HMRC – Cryptoasset Manual).

Not everything qualifies. Chargeable event gains from non-UK insurance policies, performance income and profits from trades carried on partly in the UK are excluded (Source: HMRC – FIG Excluded Income). UK income and gains remain taxable, so the FIG regime does not eliminate UK tax on domestic sources.

Claiming relief and the catch

Relief under FIG is not automatic; you must claim it annually through your self-assessment tax return. Unlike the previous non-domicile rules, where income and gains only needed to be reported if remitted to the UK, the FIG regime requires you to declare all global income and gains on your UK tax return, even if you qualify for the exemption.

A separate claim is required for foreign employment income, other foreign income and foreign chargeable gains. Claims must be filed by the end of the amendment window for each tax year (e.g. 31 January 2028 for 2025/26) (Source: HMRC – Amendments & Deadlines).

The catch? When you claim FIG, you lose your UK personal allowance and capital gains tax annual exempt amount. You also cannot set foreign income or capital losses against your UK tax bill (Source: HMRC – FIG Restrictions). This mirrors the old remittance basis and means FIG may be less attractive to those with only small amounts of overseas income. Therefore, weigh the benefits of exemption against the loss of allowances.

Case Study: Retirement Planning for UK Returnees

If you’re married or in a civil partnership, explore opportunities to maximise combined income and capital. Transferring assets might offer tax planning benefits, while utilising both ISA allowances can boost your savings.

For couples with an age gap, ensure financial stability for the younger partner. If separated, seek professional advice to untangle joint finances and establish your new financial baseline.

  • Pre-Retirement Planning
    Around 18 months before their move, they accessed their two UK pensions under the provisions of the UK–UAE Double Taxation Agreement. The proceeds were restructured into a low-cost ETF-based General Investment Account (GIA) which, once they became UK residents again, would be subject to UK Capital Gains Tax rather than income tax.
  • Portfolio Re-Basing
    Before flying back to the UK, they rebased their portfolios in full. This reset the underlying gains and created a clear distinction between growth achieved while they were UAE residents and growth accrued after their return. This made future UK tax reporting straightforward.
  • Estate Planning through a Discretionary Trust
    Prior to repatriation, Mr. and Mrs. X settled GBP 1,000,000 of non-UK situs assets into a discretionary trust for the benefit of their children. Because they had been non-UK resident for more than ten years, they were able to gift in excess of the Nil Rate Band (GBP 650,000) without incurring a Chargeable Lifetime Transfer. The gift also fell outside of the UK’s seven-year gifting rule, as it was made from non-UK assets. The amount of GBP 1,000,000 was determined with the guidance of their financial planner, who projected their retirement plan and confirmed that this capital was not required to fund their lifestyle. By making this gift into a trust, they secured a future potential inheritance tax saving of GBP 400,000 for their children.
  • Offshore Accounts and the FIG Regime
    Unlike some friends who had already repatriated to the UK, Mr. and Mrs. X retained their offshore investment accounts and Irish-domiciled ETF portfolios. By maintaining these structures for four years after their return, and making an annual FIG application, the income and gains remained outside the UK taxable regime. On their first UK tax return, they successfully applied for the Foreign Investment Gains regime. Once their four-year window for the FIG regime expires and they are no longer eligible, they restructured their General Investment Accounts in the UK to take advantage of UK tax wrappers and direct HMRC reporting. This also included a restructure of the underlying ETF portfolio into UK-domiciled funds in order to achieve a full UK reporting solution.
  • In practice, most qualifying individuals would be better off retaining offshore holdings during the ten-year inheritance tax (IHT) exemption on non-UK assets. Bringing funds onshore too early could increase exposure to IHT. Ideally, clients might consider using UK-domiciled funds only up to their IHT allowance, while retaining the remainder offshore until the tenth year of UK residence. It is also important to note that gifts from non-UK assets do not fall within the UK’s seven-year Potentially Exempt Transfer (PET) rule until the individual becomes a long-term resident. This can make pre-planning and timing of gifts before the ten-year window expires especially valuable.
  • UK Rental Property Considerations
    They also owned a small rental property in the UK. Under the FIG regime, their rental income became taxable as they forfeited both their personal allowance and Capital Gains Tax allowance.
  • Dubai Property Strategy
    Mr. and Mrs. X decided to rent out their Dubai property and defer its eventual sale while they benefit from the FIG regime. The rental income from this property is significant, yet it is not taxable in the UK under the regime. This provides them with a substantial stream of tax-free income during their first four years of retirement, while preserving flexibility over when and how to sell the property in the future.
  • Before the four-year FIG window expires, Mr. and Mrs. X will consider selling this asset to ensure any gains relating to the period of absence remain tax-free. The proceeds will then be restructured across tax-efficient UK-based investment solutions to improve diversification, tax efficiency, and retirement liquidity
  • US Share Grants and Dividends
    Through Mrs. X’s employment in Dubai, she benefited from company share grants that resulted in a significant US direct equity holding. These shares pay regular dividends. By applying the FIG regime, the dividends from her US equity holding fell outside of the UK dividend tax regime for up to four years after repatriation, providing a further layer of tax efficiency during the early stages of retirement. After the four-year window closed, she diversified this US equity holding into their broader ETF portfolio with a global mandate, reducing portfolio concentration risk as they entered the long-term retirement phase.
  • Addressing Legacy Issues
    During their time in the UAE, they had been mis-sold an offshore investment bond carrying high charges. Because such bonds remain within the UK tax net and do not qualify for the FIG regime, they chose to leave the portfolio invested and defer withdrawals until the bond’s punitive charging structure expires. This allowed them to avoid further unnecessary costs and adopt a slightly higher equity mandate to help counteract the already high ongoing charges.

Outcome
Through careful planning that included restructuring pensions, rebasing portfolios, settling a discretionary trust, making use of the FIG regime, transitioning into UK tax wrappers once their window for the FIG regime expires, strategically assessing their UK rental property, optimising their Dubai property position, and managing Mrs. X’s US equity and dividend holdings, Mr. and Mrs. X were able to significantly enhance their tax efficiency during repatriation. At the same time, they managed legacy issues in a pragmatic way that preserved long-term value while securing a major inheritance tax saving for their children.

Planning opportunities for UAE expats

Timing your return

The biggest mistake is waiting until just before returning to the UK to plan. Because FIG only lasts four years, those considering a UK return should start planning now. For example, if you move back on 6 April 2026, your FIG window runs until 5 April 2030, after which your worldwide income and gains are fully taxed.

Realising gains on foreign investments, restructuring portfolios or crystallising deferred income during the FIG period can dramatically reduce future UK tax exposure. The transition from the remittance basis to FIG has prompted greater scrutiny of global income reporting. Some returning expats are seeking compliant offshore solutions that maintain efficiency while meeting HMRC disclosure requirements. (Source: Source: GTN UK – Foreign Income and Gains Regime).

Using transitional reliefs

For former remittance-based users who lose the ability to shelter foreign gains accrued before April 2025, the government has introduced transitional facilities. A temporary repatriation facility (TRF) allows you to bring previously accrued foreign income and gains into the UK between 2025/26 and 2027/28 at a flat rate tax of 12 % (rising to 15 % in 2027/28). (Source: GTN UK – Foreign Income and Gains Regime).
Individuals who want to rebalance or repatriate older foreign wealth should consider the TRF before the window closes.

Leveraging the UK-UAE double taxation agreement

The FIG regime applies only when you become a UK resident. Until then, your pension may already be tax-free under the UK-UAE Double Taxation Treaty, which came into force on 25 December 2016. Under this treaty, payments from a UK pension plan to a UAE resident are taxable only in the UAE. Because the UAE does not levy personal income tax, British expats can withdraw their UK pension without UK or UAE tax, though they must follow HMRC and Ministry of Finance procedures. Be aware of the temporary non-resident rules: if you return to the UK within five years and were UK resident for four of the seven tax years before leaving, any flexible drawdown taken while abroad may become taxable.

Integrating estate and retirement planning

Many Gulf-based HNWIs also worry about inheritance tax (IHT) and pension legacy planning. Earlier this year, the Labour Party announced that personal pensions will be subject to UK IHT from April 2027, with assets above £325,000 potentially taxed at 40 %. At GSB, we have previously explained how combining Qualifying Non-UK Pension Schemes (QNUPS) with Indexed Universal Life (IUL) policies can offset this liability and preserve family wealth.  FIG planning should dovetail with these strategies: you might use FIG to bring overseas assets onshore tax-free, then shelter them within structures like QNUPS and life insurance to mitigate IHT. These structures, however, are not suitable for everyone, and advice must be provided on a tailored basis. It’s also worth noting that these types of structures are frequently mis-sold and carry hidden charges.

Takeaways and next steps

  • Act early: FIG reduces the planning horizon from 15 years to four years. Start preparing before you decide to become a UK resident.
  • Understand the trade-offs: The four-year exemption is valuable, but you lose personal allowances and cannot offset foreign losses.
  • Coordinate with other reforms: Align FIG planning with the IHT changes for pensions and trust taxation to build a holistic strategy.
  • Use professional advice: The rules around qualifying residency, split-year treatment and the TRF are complex. A mis-timed move could cost you thousands.

How GSB can help

At GSB, we specialise in advising high-net-worth clients across the Gulf on cross-border wealth planning. Our team has been monitoring the FIG regime since its announcement and integrates it with pension planning, QNUPS, IUL and other solutions.

If you are a UAE-based British expat considering a return to the UK, now is the time to act. The FIG regime’s four-year window is short, and once it closes, worldwide income and gains become fully taxable.

Get in touch

Contact GSB today to understand how FIG affects your wealth, how the UK-UAE tax treaty can be used to your advantage, and how to preserve your assets for generations to come.

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Sources:

Disclaimer

This article is provided for general information purposes only and does not constitute tax, legal, investment or financial advice. The FIG regime and associated UK tax rules are complex and subject to change. Past performance and past planning opportunities are not reliable indicators of future outcomes. The value of investments and the income derived from them can fall as well as rise, and you may not get back the amount originally invested. No liability is accepted for any loss arising from reliance on the information contained in this article. Readers should seek personalised advice from a qualified professional before making any decisions.

This content is intended for British expatriates residing in the UAE and wider Gulf region.

GSB Capital Ltd is registered with the Dubai International Financial Centre (DIFC), licence no. CL4377, and regulated by the Dubai Financial Services Authority (DFSA) under licence no. F006321.