FIG Regime Tax Return Claim 2025-26: Americans in the UK

The 2025-26 self-assessment return, due online by 31 January 2027, is the first full cycle in which the four-year foreign income and gains regime is genuinely claimed rather than merely planned for. Making the FIG regime tax return claim 2025-26 correctly means quantifying every sheltered amount, surrendering two UK allowances, and re-testing your US foreign tax credit position from first principles.

For Americans who arrived in the United Kingdom on or after 6 April 2025 — and for those who arrived shortly before and are still inside their first four years of residence — this filing season converts an abstract policy change into a set of boxes, figures and irrevocable positions. The remittance basis is gone. What replaced it is not a softer version of the same thing; it is a different animal with different arithmetic, and for a US citizen it interacts with the Internal Revenue Code in ways that can quietly destroy value if the claim is made on autopilot.

What is the FIG regime, and who can actually claim it for 2025-26?

From 6 April 2025 the remittance basis of taxation was abolished and replaced by a residence-based four-year foreign income and gains regime. In broad terms, an individual who becomes UK tax resident after a sufficiently long period of non-residence can elect, for each of their first four tax years of UK residence, to exclude qualifying foreign income and foreign chargeable gains from UK taxation altogether — whether or not those amounts are brought into the United Kingdom.

The eligibility gate is a period of prior non-residence. The regime is aimed at genuinely new arrivals, and the test looks back over a run of consecutive tax years immediately before the year of arrival during which the individual was not UK resident. Someone who has cycled in and out of the United Kingdom over the last decade will very often fail. Someone who left the United Kingdom many years ago and is returning may qualify afresh. This is the single most important thing to establish before any other analysis, because the entire structure of the return depends on it, and residence history is a question of fact under the Statutory Residence Test rather than a matter of intention.

Three further features distinguish the new regime from the old remittance basis:

• No remittance concept. Amounts sheltered by a valid claim can be brought into the United Kingdom and spent freely without a further UK charge. The mixed-fund gymnastics that dominated the old world simply do not apply to FIG-year money, provided it is properly segregated and evidenced.
• No annual charge. There is no equivalent of the old remittance basis charge. The regime is free in cash terms; what it costs is allowances and disclosure.
• A hard four-year life. The clock starts in the first tax year of UK residence and runs regardless of whether a claim is made in each of those years. Failing to claim in year one does not extend the window into year five.

Why the 2025-26 return is the first real test

The regime took effect on 6 April 2025, which means 2025-26 is the first tax year for which a claim can be made and the 2025-26 return is the first return on which HMRC sees one. Paper returns are due by 31 October 2026 and online returns by 31 January 2027, with the balancing payment for 2025-26 due on the same January date.

That timing matters more than it sounds. Advisers and software providers have spent a year modelling the regime; this is the first cycle in which the modelling is tested against actual figures, actual foreign custodian statements and actual HMRC validation rules. Positions taken now set the pattern for years two, three and four, and mistakes made in the first claim tend to propagate. We would treat the first FIG claim with the same seriousness as a first-year US return after expatriation planning: it is the document everything else is measured against.

How is the claim actually made?

Quantification, not a tick box

The critical mechanical point — and the one most likely to catch out those who lived comfortably under the remittance basis — is that the FIG claim is a quantified claim. It is not enough to indicate on the return that you are a qualifying new resident and leave the foreign pages blank. You must identify and state the amounts of foreign income and foreign chargeable gains in respect of which relief is claimed. The relief is given by reference to figures you supply.

In practice that means the foreign pages of the return must be completed to a level of detail that many new arrivals have never previously produced for HMRC. Dividends from a US brokerage account, interest on a money market fund, distributions from partnerships and LLCs, rental profit from a property in Florida, gains on the disposal of stock acquired long before arrival — each needs to be computed under UK principles, converted to sterling, and disclosed, even though the effect of the claim is that no UK tax arises on it.

UK computational rules do not mirror US ones. A gain is recomputed on UK principles, which do not recognise the US wash-sale rules, do not permit US-style netting in the same way, and do not import the US holding-period distinctions. Foreign exchange movement on the underlying currency is part of the UK gain. Getting the underlying number right is the work; claiming relief on it is the easy part.

Choosing what to shelter

Because the claim is made by reference to specified amounts, it is possible to claim in respect of some foreign income and gains and not others. That flexibility is where careful planning earns its fee for a US citizen, because — as set out below — sheltering an amount from UK tax does not make it disappear from the US return, and in some cases the UK tax you avoid is worth less to you than the foreign tax credit it would have generated.

Note also that a claim must be made within the ordinary self-assessment claim window. For 2025-26 that means the claim needs to be in the original return or made by amendment within the statutory period following the filing date. Late is not a category HMRC has shown much appetite for.

What you surrender: the personal allowance and the CGT annual exempt amount

Claiming under the FIG regime for a tax year costs you the UK personal allowance and the capital gains tax annual exempt amount for that same year. This mirrors the old remittance basis rule and it applies on an all-or-nothing basis: claim relief on a single pound of foreign income and both allowances are gone for the year.

For the client base we act for, this is usually a non-event. The personal allowance is tapered away entirely once adjusted net income exceeds a threshold in the region of £125,000, so a high-earning executive or a founder with meaningful UK-source income has no allowance left to surrender. The capital gains annual exempt amount has been reduced to a few thousand pounds and is similarly immaterial against a seven-figure disposal. The surrender is a real cost only in the specific case of a new arrival with modest UK-source income and a large offshore portfolio — for example, a retired American living on US investment income with a small UK consultancy. In that scenario the arithmetic needs running both ways.

Position for 2025-26	Claim made under the FIG regime	No claim made
Foreign income and gains	Excluded from UK tax; remittable without further charge	Taxed in the UK on the arising basis at full rates
UK personal allowance	Surrendered for the year	Available (subject to the usual income taper)
CGT annual exempt amount	Surrendered for the year	Available
Disclosure burden	High — amounts must be quantified and reported	High — amounts are taxed and therefore reported
UK tax available as a US foreign tax credit	None on the sheltered income	UK tax paid is generally creditable, subject to basket and sourcing rules
Effect on the four-year clock	Year consumed	Year still consumed — the window is fixed by residence

The widened disclosure of offshore income

One of the quieter consequences of the reform is that the volume of offshore information flowing to HMRC on a new arrival's return increases sharply. Under the remittance basis, an individual could report remittances and comparatively little else. Under the FIG regime the sheltered amounts themselves are on the return. HMRC therefore receives, for the first time, a full picture of an American new arrival's worldwide investment income and disposals.

That picture does not sit in isolation. It is read against Common Reporting Standard data, against FATCA reporting flowing from US institutions, and against any UK bank account into which funds subsequently arrive. Inconsistency between the claimed FIG figures and third-party data is precisely the kind of discrepancy that generates a discovery enquiry — and the offshore penalty regime applies enhanced rates to inaccuracies involving offshore income and assets. HMRC guidance on the treatment of foreign income for UK residents is published at gov.uk, with the detailed technical material in the Residence, Domicile and Remittance Basis Manual.

The practical instruction we give clients is unglamorous but effective: reconcile before you file. Every foreign account that will appear on the FIG schedule should also be reconciled to the FBAR and to Form 8938, and any account that appears on one and not the others should be explained in the file. Where historic US filings are incomplete, the correct sequence is to resolve that first — our IRS streamlined filing specialists can assess whether the streamlined procedures remain available before a UK return puts the same accounts in front of a second revenue authority.

How does the FIG claim interact with the US foreign tax credit?

This is the question that separates an American new arrival from every other client using the regime, and it is where most of the value is won or lost.

US citizens are taxed on worldwide income regardless of residence. A FIG claim removes the UK tax on foreign income and gains; it does nothing whatsoever to the US charge. The mechanical consequence is immediate: if there is no UK tax, there is no foreign tax to credit, and the US tax on that income is paid in full.

Item	UK treatment with a FIG claim	US treatment
US-source dividends and interest	Not UK taxed under the claim	Fully taxable; no foreign tax credit arises because no UK tax is paid
Gains on non-UK securities	Not UK taxed under the claim	Taxable at US capital gains rates, plus net investment income tax where applicable
UK employment income	Taxable in the UK on the arising basis — FIG does not shelter UK-source income	Taxable, with relief typically by foreign tax credit or the foreign earned income exclusion
Non-UK employment income	Potentially relieved, subject to the reformed Overseas Workday Relief limits	Taxable; relief depends on sourcing and available credits
Excess foreign tax credits	None generated on sheltered income	No carryback or carryforward pool created from that income

The credit carryforward you quietly destroy

Consider a founder with a large gain on a non-UK holding realised in 2025-26. Without a FIG claim, the United Kingdom taxes the gain at its main capital gains rate; the US charge is reduced by credit for that UK tax, and any surplus may generate a carryforward within the relevant limitation basket. With a FIG claim, the UK charge is nil and the US charge is paid in full — usually a lower headline outcome, and often materially so.

But the excess credit that the alternative would have generated is also gone. If the same individual expects several years of heavily UK-taxed income ahead, that carryforward has real value, and the sourcing rules under section 904 mean it can only be used against income in the same basket. The right answer depends on a multi-year projection, not on a single-year comparison. The IRS materials on the credit and on Form 1116 set out the basket and carryover mechanics, and the general framework is summarised in the IRS foreign tax credit guidance.

Treaty position and the savings clause

The US-UK double tax treaty contains a savings clause that preserves the United States' right to tax its citizens broadly as if the treaty did not exist, subject to defined exceptions. Americans therefore cannot use the treaty to disapply US taxation of income that the FIG claim has removed from UK charge. What the treaty can do, in specific circumstances, is affect the source of income for credit purposes, and re-sourcing is one of the few levers left once a FIG claim has been made. This is technical territory and should be modelled before the UK return is filed, not after. Our cross-border tax planning team runs both returns as a single computation for exactly this reason.

Overseas Workday Relief in its reformed shape

Overseas Workday Relief survived the reform but was rebuilt around the same four-year eligibility test as the FIG regime, and it now carries an annual financial limit expressed as a percentage of qualifying employment income subject to a cash cap. For a senior executive relocating to London with a significant non-UK workday pattern, this remains one of the most valuable reliefs available — but the cap means it no longer scales indefinitely with compensation, and the workday records that support it must be contemporaneous. Diaries reconstructed in January 2027 for a year that ended in April 2026 are not evidence.

The Temporary Repatriation Facility runs alongside

Individuals who used the remittance basis in earlier years hold pre-6 April 2025 foreign income and gains that remain taxable if remitted. The Temporary Repatriation Facility allows those historic amounts to be designated and taxed at a reduced flat rate over a limited window beginning with 2025-26, with the rate stepping up in the final year. It is a separate election from the FIG claim, made on the same return, and it is the mechanism by which long-standing offshore mixed funds can be cleaned up and brought onshore at a known cost. Anyone who has been in the United Kingdom long enough to have a legacy remittance basis pool should be modelling the facility and the FIG claim together, not in isolation. For families with settled structures, the trust interactions need separate attention — see our work on trusts and estate planning.

Year four and the cliff edge

The four-year window ends. In year five the individual is taxed on worldwide income and gains on the arising basis like any other UK resident, and by then the long-term residence test for inheritance tax is also in view. The value of the FIG years is therefore partly in the tax saved and partly in the runway they provide: four years in which to restructure portfolios, dispose of assets with embedded gains, reorganise trust arrangements and rebase where possible before the full UK charge lands.

We routinely see new arrivals treat years one to three as a holiday and start planning in year four. That is the wrong order. The disposals and restructuring that benefit most from the FIG window should be executed early in it, while there is still time to correct anything that behaves unexpectedly on the US side.

Common errors we expect on 2025-26 returns

• Assuming the claim is a declaration rather than a quantified schedule, and leaving foreign pages incomplete.
• Using US-basis figures for UK gains, ignoring sterling functional currency and UK computational rules.
• Claiming FIG relief on income where the surrendered US foreign tax credit was worth more than the UK tax avoided.
• Overlooking that UK-source income, including UK workdays, is never sheltered by a FIG claim.
• Failing to reconcile the FIG schedule with FBAR and Form 8938 disclosures, creating an avoidable inconsistency across two authorities.
• Forgetting that PFIC exposure on non-US funds continues to run through the FIG years, generating US tax with no offsetting UK charge at all.
• Treating the four-year clock as starting when the first claim is made rather than in the first year of residence.

A working sequence for the 2025-26 filing season

1. Confirm qualifying new resident status against the prior non-residence test and the Statutory Residence Test, in writing.
2. Build the worldwide income and gains schedule on UK computational principles, in sterling.
3. Model the US return with and without a FIG claim, including net investment income tax, PFIC exposure and credit carryforwards.
4. Decide, amount by amount, which foreign income and gains to shelter.
5. Test the personal allowance and annual exempt amount cost against the relief obtained.
6. Consider a Temporary Repatriation Facility designation for any pre-April 2025 pool.
7. Reconcile against FBAR, Form 8938 and CRS-reportable accounts before filing.
8. File the UK return by 31 January 2027 and diarise the amendment window.

Jungle Tax advises Americans, dual filers and internationally mobile families on both sides of the Atlantic, and our private client tax and high-net-worth teams prepare UK and US returns as a single, reconciled position rather than two disconnected filings.

If you became UK resident in 2025-26, or are inside your first four years and have not yet modelled the claim, the time to act is well before the January 2027 deadline — the analysis that determines whether a FIG claim is worth making has to happen while the year's transactions can still be shaped. To review your position in confidence, contact our cross-border team for a private consultation. We will tell you plainly whether the claim helps you, what it costs, and what the four-year window should be used for.