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From 6 April 2025, the UK introduced the Foreign Income and Gains (FIG) regime, a tax relief specifically designed to welcome back British expats who have spent a decade or more abroad.
The relief is simple in concept but powerful in effect: if you have been non-UK resident for at least 10 consecutive tax years, and you return to the UK, you can claim exemption on all foreign income and foreign capital gains for your first four years of UK residence.
For a British expat in Portugal earning GBP 100,000 per year from overseas investments, FIG relief means GBP 400,000 of income is tax-free over the four-year window-an economic saving of approximately GBP 160,000 to GBP 180,000 at marginal rates of 40-45%.
The regime also includes a Temporary Repatriation Facility (TRF) that allows unremitted foreign income held in offshore accounts to be brought into the UK at a favourable 12% tax rate (available through 2027/28). For someone with GBP 500,000 in offshore savings, this represents a one-time opportunity to regularise the status of that wealth at a cost far below the normal income tax rate.
But the relief is narrow. It applies only if you meet the 10-year threshold precisely. It lasts only four years. It does not apply to UK-source income. And once the four-year window closes, you revert to full UK tax residence at standard rates.
For British expats in Portugal considering return to the UK, this article explains how FIG relief works, whether you qualify, how to calculate your non-residence period, and how to time your return to maximise the relief.
FIG relief is the successor to the non-dom regime, which was abolished on 6 April 2025. While the non-dom regime applied indefinitely (as long as you maintained a domicile of choice overseas), FIG relief is time-limited: it lasts four years and applies only to those with 10+ years of prior non-UK residence.
The regime was created as a compromise between two competing objectives:
Objective 1: Encourage Return of British Talent
British expats with valuable skills, business experience, and financial assets represent a material return to the UK economy. Many have been abroad for 10+ years and have weak incentives to return if they will immediately face UK tax on their overseas income. The FIG regime removes this disincentive by providing a four-year tax-free window on foreign income.
Objective 2: Limit Cost and Duration of Tax Forgone
The government recognises that indefinite relief (like the old non-dom regime) is politically unsustainable. A four-year relief is more politically defensible than permanent non-dom status. By limiting the relief to four years, the government captures tax revenue from returning expats after the window closes, and after they have had time to restructure their affairs.
The result is FIG relief: a narrower, time-limited alternative to non-dom status that provides similar economic benefit for returning expats but with a sunset.
To claim FIG relief, you must qualify as a "qualifying new resident." The conditions are:
1. Non-UK Residence for 10 Consecutive Tax Years
You must have been non-UK resident for at least 10 full tax years immediately before your return. The 10-year period is measured from the first tax year of non-UK residence to the last tax year before return.
Example: If you left the UK in June 2015, your first non-resident tax year is 2015/16. Counting 10 consecutive tax years takes you through 2024/25. If you return in April 2025 (start of tax year 2025/26), you have exactly 10 years of non-UK residence (2015/16 through 2024/25) and qualify.
If you return in March 2025 (before the end of tax year 2024/25), you are still UK resident for 2024/25, and your non-residence count is only nine years. You do not qualify.
This is why the timing of return is critical: a two-month difference (March vs May) determines whether you have 10 years of non-residence or only nine.
2. No UK Residence in the 10 Years
The 10 years must be consecutive. If you spent 183+ days in the UK in any tax year during the 10-year period, the clock restarts. You do not count that year and any subsequent years as part of the 10-year streak.
Minor visits to the UK (less than 183 days per year, or temporary absences) are permitted. But if you spent more than 182 days in the UK in any single year, that breaks the non-residence chain and restarts the count.
Example: If you were in Portugal for 11 years but returned to the UK for six months in 2020 (spending 183+ days), your non-residence count resets. You then need another 10 years of non-residence from 2021 onwards (i.e., until 2031) to qualify for FIG relief.
3. Return to UK Tax Residence
You must become UK tax resident in the year you claim FIG relief. This happens automatically if you spend 183+ days in the UK in that tax year, or through other Statutory Residence Test conditions (such as having a UK home and spending 91+ days there).
Once you are UK tax resident, FIG relief applies to your first four tax years of residence.
FIG relief exempts the following from UK taxation:
Foreign Employment Income
Wages, salary, bonuses, and other employment income earned in foreign countries. This includes pensions received from non-UK sources (e.g., Portuguese occupational pension, private pension held in a non-UK jurisdiction).
Foreign Investment Income
Interest, dividends, and distributions from investments held outside the UK. This includes: - Interest from foreign bank accounts and bonds - Dividends from foreign company shares or funds - Returns from overseas insurance policies or annuities - Income from foreign trusts (subject to specific rules)
Foreign Rental Income
Rental income from property held overseas. If you own a property in Portugal or Spain and receive rental income, that income is exempt from UK tax under FIG relief.
Gains on disposal of assets held outside the UK. This includes: - Gains on sale of foreign property - Gains on sale of shares in foreign companies - Gains on sale of offshore investments or funds
The gain is measured from acquisition to disposal and is not reduced by the capital gains annual exempt amount (GBP 3,000). Under FIG relief, the entire gain is exempt from UK tax.
What Does NOT Qualify (UK-Source Income and Gains)
FIG relief does not exempt: - UK employment income - UK property rental income - UK pension income (from UK pension plans) - Gains on UK property sales - Gains on UK shares or investments held in personal names - Dividends from UK companies
If a returning expat has UK property generating rental income, or has UK pensions, or has UK shares, those income streams are fully taxable from the date they return to the UK, regardless of FIG relief.
This is the limitation of FIG relief: it only protects foreign income. UK-source income is always taxable.
FIG relief applies for four complete tax years from the date you become UK tax resident.
Example: An expat returns to the UK on 1 April 2025 (start of tax year 2025/26).
If the same expat returns on 1 May 2025 (mid-tax year, before split-year treatment ends), they are UK resident for only part of 2025/26 and the full four-year window is calculated from 6 April 2025 (the start of the tax year in which they became resident).
Once the four-year window closes, there is no extension and no second chance. The returning expat then becomes subject to full UK tax residence at standard rates (20-45% income tax, 18-24% capital gains tax) and must declare all foreign income in subsequent years.
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In addition to the four-year foreign income exemption, the UK introduced a Temporary Repatriation Facility (TRF) that allows unremitted foreign income and gains accumulated in offshore accounts to be brought into the UK at a favourable 12% tax rate.
The TRF is available through the 2027/28 tax year only (a three-year window: 2025/26, 2026/27, 2027/28). After 2027/28, the facility expires and this opportunity is lost.
How the TRF Works
If you have accumulated foreign income and gains that have not been brought to the UK (and therefore have not been taxed in the UK), you can elect to regularise the status of that capital by:
Example
An expat has been living in Portugal for 12 years, earning GBP 50,000 per year from overseas investments. The income was reinvested overseas and never brought to the UK. Total unremitted income: GBP 600,000.
Under normal taxation, bringing this GBP 600,000 to the UK would be taxed at the marginal rate of 40-45%, generating GBP 240,000-270,000 in tax.
Under the TRF, the GBP 600,000 is taxed at 12%, generating GBP 72,000 in tax. The net benefit of using the TRF is GBP 168,000-198,000 in tax savings.
Conditions and Limitations
The TRF applies to unremitted foreign income and gains that: - Have arisen before the return to the UK (i.e., they must be from the non-UK residence period) - Have been held in offshore accounts or investments and genuinely not brought to the UK - Are disclosed fully and accurately to HMRC (no partial disclosure)
It does NOT apply to: - Income or gains that have already been taxed in the UK - Funds that have already been brought to the UK (even if they came from foreign sources) - Amounts that are subject to other tax reliefs or exemptions
Critical Timing
The TRF is only available through 2027/28. If a returning expat delays claiming FIG relief or using the TRF, and returns after 2027/28, the facility has expired and the opportunity is permanently lost. This is a material factor in deciding when to return from Portugal.
While FIG relief exempts foreign income and gains, it does so at a critical cost: the loss of the personal allowance (GBP 12,570) and the capital gains annual exempt amount (GBP 3,000).
For individuals claiming FIG relief, all income and all capital gains are subject to tax from the first pound. The personal allowance does not apply. The capital gains exemption does not apply.
This means:
On Investment Income
A returning expat with GBP 100,000 in foreign investment income is taxed at 20% (basic rate) on the full amount, with no personal allowance reduction. Tax: GBP 20,000.
If the same expat had UK investment income (which is not protected by FIG relief), they would lose the personal allowance and also pay tax on the income. But the distinction is important: under normal UK residence, foreign income and UK income stack together, and the personal allowance is applied once to the total. Under FIG relief, the personal allowance is completely lost for the entire tax year.
On Capital Gains
A returning expat who sells a foreign property for a GBP 200,000 gain is taxed on the full amount (GBP 200,000 × 18% = GBP 36,000) with no capital gains exemption.
If the same expat had UK capital gains (not protected by FIG relief), they would have a GBP 3,000 exemption applied to the total of UK and foreign gains. But under FIG relief, the foreign gains are treated separately and are subject to tax with no exemption.
Marginal Rate Implications
For high-income returning expats, the loss of personal allowance can push the marginal rate above the normal 40% or 45%. If the expat has GBP 150,000 in foreign investment income plus GBP 100,000 in UK salary:
This interaction can make the return to the UK more expensive than anticipated for high-income returning expats. A tax adviser should model the marginal rate impact before the return.
A returning expat may benefit from split-year treatment if they leave the UK before the end of a tax year and then return after 10 years of non-residence.
Split-year treatment divides a tax year into: - A period when the individual was not UK tax resident (non-resident portion) - A period when they became UK tax resident (resident portion)
If split-year treatment applies, UK tax is due only on the resident portion of the year (income and gains arising after the individual returned to the UK).
For a returning expat, this means:
Example: Departure and Return with Split-Year
An expat left the UK on 1 June 2014 and returns on 1 May 2025.
If split-year treatment is available: - 2014/15: Split year (non-resident portion from June onwards) - 2015/16 through 2024/25: 10 full non-resident years - 2024/25: Split year (resident portion from May onwards)
Under this scenario, the 10-year non-residence threshold is met (2015/16 through 2024/25), and FIG relief can be claimed from the return date (1 May 2025). The resident portion of 2024/25 is the first year of FIG relief.
This creates an additional benefit: the individual captures the resident portion of 2024/25 as year 1 of FIG relief, gaining a partial fifth year of foreign income exemption (though split across two calendar years).
The conditions for split-year treatment are narrow and depend on specific statutory cases (such as ceasing UK employment and departure, or returning to the UK after long non-residence). A tax adviser should confirm whether split-year treatment is available for a specific return scenario.
Returning to the UK triggers UK inheritance tax residence, which applies from the date of return.
Under the new UK IHT residence-based system (effective from April 2025), an individual who returns to the UK after 10+ years of non-residence is not immediately a "long-term resident" for IHT purposes. But each year of UK residence counts towards the long-term resident definition (10 of the previous 20 years).
Once the individual has been UK resident for 10 of the previous 20 years, they become a long-term resident and are subject to IHT on their worldwide assets at 40% (above the nil rate band of GBP 325,000).
For a returning expat who returns in April 2025: - Years 1-10 of UK residence: Not a long-term resident initially, but the clock is counting - Year 10 (April 2035): Becomes a long-term resident and IHT applies to worldwide assets - The "tail" rule: Even after becoming a long-term resident, there is a three-year tail period (years 11-13) where certain non-UK assets remain outside the scope of IHT if they were acquired before UK residence and have not been brought into the UK
FIG relief does not protect foreign assets from inheritance tax. Once the four-year FIG relief window closes and the individual becomes a long-term UK resident, their worldwide estate is subject to IHT.
For returning expats with substantial overseas property or investments, IHT planning (such as reviewing trust structures, life insurance arrangements, and will provisions) should be part of the return strategy.
Returning to the UK and claiming FIG relief does not affect National Insurance (NI) contributions or pension access.
Once you become UK tax resident, you are subject to UK NI on earned income (wages, salary, profits from self-employment). FIG relief applies to foreign income and capital gains, not earned income.
For a returning expat aged 60+ with significant NI gaps from the years abroad, filling those gaps through voluntary contributions is a valuable strategy. Class 2 voluntary contributions are no longer available (from April 2026), so paying Class 3 contributions (GBP 17.75 per week) or Class 2 contributions (GBP 3.50 per week) before April 2026 is advised.
Pension Access
Returning to the UK allows access to UK pensions from age 55 onwards. If you have a UK SIPP or personal pension, you can begin drawdowns once you are UK resident and aged 55+.
Drawdowns from UK pensions are subject to normal income tax, and FIG relief does not apply (because UK pension income is UK-source income). However, if you hold a foreign pension or QROPS (Qualifying Recognised Overseas Pension Scheme), income from that arrangement may be protected under FIG relief.
Annual Allowance
The annual allowance (GBP 60,000 for 2025/26) applies to pension contributions. For a returning expat who is still working, contributions above the allowance trigger a charge. FIG relief does not affect this. Pension planning should coordinate with return timing to avoid exceeding the allowance in the return year.
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The four-year FIG relief window is not permanent. After it closes, the returning expat becomes subject to full UK tax residence and must declare all foreign income at normal UK rates.
Tax Year 2029/30 Onwards (Assuming Return in April 2025)
From 6 April 2029, FIG relief expires. Foreign income and gains are now subject to UK tax at normal rates:
Strategic Options for Post-Window
Returning expats should plan in advance for the post-FIG-window period:
Most returning expats plan to remain in the UK after the FIG window closes and accept full UK tax residence. But those with substantial overseas income should model the post-window position carefully before committing to return.
To claim and maintain FIG relief:
Failure to claim FIG relief where eligible, or misrepresenting the source of income, can result in penalties and back tax assessments. A qualified tax adviser should review the structure before filing the first return.
If you have been in Portugal for 10+ years and are considering returning to the UK, the most valuable conversation you can have is about FIG relief eligibility and timing.
You may find:
You have exactly 10 years of non-residence and qualify for FIG relief immediately upon return
The cost of a conversation with a tax adviser (EUR 2,000-5,000) is recovered in FIG relief planning in the first month. The cost of not having that conversation is the possibility of missing the 10-year qualification threshold, claiming FIG relief invalidly, or failing to use the Temporary Repatriation Facility before it expires in 2027/28.
For British expats in Portugal considering return, this is not a decision to be made alone. It is a decision to be made with expert guidance on timing, qualification, and post-window planning.
The Foreign Income and Gains (FIG) regime is the most valuable tax relief available to returning British expats. A four-year exemption on foreign income and capital gains is worth GBP 200,000 to GBP 400,000 in tax savings for high-income individuals.
But the relief is conditional:
For British expats in Portugal who have built offshore wealth over a decade or more, returning to the UK with FIG relief is the most tax-efficient path home. The four-year window provides time to restructure affairs, bring capital to the UK at favourable rates, and plan for the eventual return to full UK tax residence.
Most expats who claim FIG relief do not regret the return to the UK. Those who miss the relief (by returning one year too early) regret it for years to come.
In a career spanning numerous locations around the world, Ryan has first-hand experience of how to best support international investors with financial planning advice and security on a domestic and international level.
This article is for information purposes only and does not constitute financial advice. FIG relief eligibility depends on individual circumstances, residency history, and specific tax years. Professional advice should always be sought before making decisions regarding return to the UK or claiming FIG relief.
The 10-year non-residence test has technical rules about what breaks the count. A conversation with a tax adviser can help you:
If you have EUR 500,000 in foreign savings earning GBP 30,000 per year, and you bring that savings into the UK under the Temporary Repatriation Facility (rather than under normal FIG relief), you can have it taxed at 12% (roughly GBP 60,000 one-time) rather than waiting to be taxed at normal income tax rates (which could be 45% at the top). But the TRF is only available through 2027/28. If you return to the UK in 2026, you have a three-year window to bring offshore funds into the UK at 12%. If you return in 2028, the facility has expired and you miss the opportunity. For investors with substantial offshore capital, the TRF timing is a material factor in the decision of when to return
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Ryan Donaldson is a Chartered FCSI Private Wealth Partner at Skybound Wealth who advises long-term expats on FIG relief planning and the optimal timing of return. A focused conversation before you commit to return can help you:
