Introduction The abolition of the remittance basis from 6 April 2025 is the biggest change to UK tax for internationally mobile individuals in a generation. For US citizens who previously shielded foreign income from UK tax by keeping it offshore, the transition to the Foreign Income and Gains regime requires careful planning across two tax […]
The abolition of the remittance basis from 6 April 2025 is the biggest change to UK tax for internationally mobile individuals in a generation. For US citizens who previously shielded foreign income from UK tax by keeping it offshore, the transition to the Foreign Income and Gains regime requires careful planning across two tax systems simultaneously.
IRS Streamlined Filing Experts who understand both the new UK FIG regime and the US citizenship-based tax system are uniquely placed to manage this transition. The FIG four-year exemption window creates real planning opportunities — but those opportunities interact with the US Foreign Tax Credit calculation in ways that require specialist modeling before any action is taken. The Temporary Repatriation Facility creates a time-limited window to bring pre-April 2025 offshore income to the UK at a reduced rate — but the US FTC position on that payment must be assessed first.
This guide covers the non-dom to FIG transition specifically for US citizens — focusing on the dimensions that IRS Streamlined Filing Experts manage that UK-only advisers miss entirely. Visit our advisory service:
https://www.jungletax.co.uk/services/us-uk-tax/
IRS Streamlined Filing Experts in the FIG transition context are advisers who understand both the new UK foreign income and gains framework — in force from 6 April 2025 — and the US federal tax system that applies to US citizens regardless of their UK residency or domicile status. Every FIG planning decision affects both systems simultaneously. Claiming the FIG exemption eliminates UK tax on foreign income — but it also eliminates the FTC available on the US return for that same income. Making the TRF election reduces UK tax on pre-2025 foreign income — but the US FTC interaction requires specialist analysis before the election is made.
The IRS guidance on US citizens abroad is at:
https://www.irs.gov/individuals/international-taxpayers/us-citizens-and-resident-aliens-abroad
A UK-only adviser can explain the FIG regime, the TRF election, and the four-year exemption window. They cannot model the US FTC impact of each choice. An IRS Streamlined Filing Experts practice models both outcomes — confirming that FIG planning produces the best combined UK and US result, not just the best UK result in isolation.
The FIG four-year exemption exempts qualifying foreign income and gains from UK income tax and CGT. From a UK perspective, this is entirely beneficial. From a US perspective, however, the absence of UK tax on that income means no FTC is available on the US return to offset the US liability on the same income. A US citizen who claims the FIG exemption for all foreign income may end up paying more combined US-UK tax than a client who opts out and pays UK tax, generating FTC to offset the US liability.
The Temporary Repatriation Facility allows individuals who previously claimed the remittance basis to designate pre-April 2025 foreign income and pay a reduced UK tax rate — 12 percent in 2025/26 and 15 percent in 2026/27. For a US citizen, that pre-April 2025 income was already reported on prior US federal returns. The TRF payment generates a UK tax liability on income already taxed in the US. Whether that payment is creditable as a foreign tax on the US return requires specialist analysis.
Our guide to the non-dom to FIG regime transition is at:
https://www.jungletax.co.uk/jungle-tax-news-updates/accountants-for-us-and-uk-non-dom-fig/
The TRF rate is 12 percent in 2025/26 and rises to 15 percent in 2026/27. After 5 April 2027, the facility will close entirely. Future remittances of pre-April 2025 foreign income then attract the full UK income tax rate. Missing the deadline is permanent — there is no retrospective election available.
The FIG four-year exemption applies to individuals who become UK residents for the first time and have not been UK residents in any of the ten tax years before arrival. During the four years, qualifying foreign income and gains are exempt from UK income tax and CGT. The exemption is optional. The individual can opt out in any year, paying UK tax on foreign income and gains to generate FTC on the US return.
For a US citizen who arrived in the UK within the last four years and qualifies, the IRS Streamlined Filing Experts at Jungle Tax model both options — claiming the exemption versus opting out — to find the lower combined US-UK tax for each year of the period independently.
During the FIG exemption period, qualifying foreign capital gains are exempt from UK CGT. A US citizen with significant unrealized gains in a US investment portfolio, a US property, or non-UK funds can crystallize those gains without triggering UK CGT. US capital gains tax still applies — but the UK CGT saving from acting during the window can be very significant. The IRS Streamlined Filing Experts at Jungle Tax identify every qualifying gain and sequence disposals before the four-year window expires.
The TRF rate is 12 percent in 2025/26 and 15 percent in 2026/27. For a US citizen with a large pre-April 2025 offshore income pool — typically US investment income sheltered from UK tax under the remittance basis — the 12 percent TRF election may be significantly cheaper than paying full UK income tax on the remittance basis in later years. The election must be made on the UK self-assessment return before 5 April of the relevant tax year. It cannot be made retrospectively.
A US citizen who holds a SIPP and has the Article 17 treaty election in place is not affected by the FIG regime for SIPP growth. The Article 17 election continues to defer US tax on SIPP growth under the US-UK treaty, regardless of the FIG exemption position. However, the election must be made annually on every US federal return — it does not carry forward automatically.
Benjamin is a US citizen. He arrived in the UK from New York in January 2023 — he is in his third year of UK residence and qualifies for the FIG four-year exemption. His financial position: a US investment portfolio generating approximately $65,000 of annual dividends and interest; a US rental property generating $28,000 of annual rental income; and a pre-April 2025 offshore income pool of approximately $195,000.
Benjamin’s previous UK adviser had recommended that he claim the FIG exemption for all foreign income in 2025/26 — on the basis that it would eliminate UK income tax. Benjamin contacted Jungle Tax for a second opinion before filing.
Jungle Tax modeled both options for Benjamin’s foreign income in 2025/26.
Claiming the FIG exemption: nil UK tax on $93,000 of foreign income. However, no FTC is available on the US return. US federal tax on $93,000 at approximately 22 percent = approximately $20,460 (approximately £16,100) with no offset.
Opting out: UK income tax at 40 percent on approximately £73,200 = approximately £29,280. That UK tax generates approximately $37,200 of FTC — fully offsetting the US federal liability—combined cost of opting out: £29,280 UK income tax, nil US tax.
Opting out was approximately £13,180 cheaper in 2025/26. Benjamin’s previous adviser had not modeled the impact of the US FTC at all.
For the pre-April 2025 offshore income pool of $195,000 with a 12 percent TRF election, the cost is approximately £18,500. The alternative — full UK income tax at 40 percent on future remittances — would cost approximately £61,700. The TRF election was made before 5 April 2026, saving approximately £43,200. The TRF payment was also confirmed as creditable on Benjamin’s US return — a dimension the previous adviser had not considered.
The FIG exemption eliminates UK tax on foreign income — but also removes the FTC on the US return for that income. Claiming the exemption without modeling the impact of the US FTC can result in a higher combined tax than opting out. Always model both options for each year of the exemption period.
The TRF reduced rate is available only if the election is made on the UK self-assessment return before 5 April of the relevant tax year. Missing it means paying the full UK income tax rate on future remittances. The adviser monitors this deadline for every eligible client and treats it as a priority filing action.
The FIG four-year exemption provides a UK CGT-free window for qualifying foreign gains. A US citizen who fails to identify and act on significant unrealized gains during the window misses the opportunity permanently. Review the investment portfolio at the start of the exemption period — not near the end.
The Article 17 treaty election must be made on every annual US federal return. It does not carry forward automatically. During the FIG transition period — when multiple elections are underway — the Article 17 election is sometimes overlooked. The IRS Streamlined Filing Experts at Jungle Tax include it as a mandatory checklist item on every return.
The HMRC guidance on the Statutory Residence Test is at:
https://www.gov.uk/government/publications/rdr3-statutory-residence-test-srt
Jungle Tax is a specialist US-UK cross-border tax advisory firm with IRS Streamlined Filing Experts who include IRS Enrolled Agents and UK-qualified tax practitioners experienced in managing the FIG transition for US citizens in the UK. We confirm FIG eligibility, model the exemption versus opt-out for every year, and assess the TRF election, including the US FTC position on the payment.
Read our guide to pre-immigration planning for US citizens moving to the UK:
https://www.jungletax.co.uk/jungle-tax-news-updates/us-and-uk-tax-advisors-pre-immigration/
The non-dom to FIG regime transition for a US citizen requires IRS Streamlined Filing Experts who understand both the new UK framework and the US citizenship-based tax system — and who model their interaction before any decision is made.
Three points matter most. First, the FIG exemption eliminates UK tax on foreign income — but also removes the FTC on the US return for that income. Always model both options before claiming the exemption. Second, the TRF window is time-limited — 12 percent in 2025/26, 15 percent in 2026/27, and then permanently closed. Third, the FIG window gives four years of UK CGT-free gain crystallization — identify and sequence disposals at the start, not near the end of the period.
Jungle Tax | mailto:hello@jungletax.co.uk | 0333-8807974 | https://www.jungletax.co.uk
The FIG exemption gives new UK residents four years of relief from tax on foreign income and gains. You qualify if you were not a UK resident in any of the ten tax years before your arrival.
Yes. No UK tax on foreign income means no FTC on the US return for that income. The US still taxes the same income. Always model both claiming and opting out before deciding each year.
The TRF allows pre-April 2025 offshore income to be designated at 12% in 2025/26 or 15% in 2026/27. After 5 April 2027, it closes permanently — full UK rates apply to all future remittances.
It depends on your income level and FTC basket position each year. The optimal choice varies annually — a specialist models both options before deciding for that tax year.
The Article 17 SIPP election continues unchanged — but must be made on every annual US return. The FIG exemption does not affect Article 17 deferral on SIPP growth inside the wrapper.
Qualifying foreign capital gains — US stocks, US property, non-UK funds outside a SIPP — can be crystallized without UK CGT over the four years. US CGT still applies. Act early rather than near the window’s end.
