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Do new UK residents pay UK tax on their foreign income and gains?

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If you become UK tax resident after at least 10 consecutive tax years of non-residence, you can claim relief from UK tax on eligible foreign income and gains for up to your first 4 tax years of residence. You claim in your Self Assessment return and lose your Personal Allowance and Capital Gains Tax allowance for that year.

Key facts

What The law says Source
Since when 6 April 2025, replacing the remittance basis HMRC, Check if you can claim the 4-year FIG regime
Who qualifies A “qualifying new resident”: UK resident for the tax year, and not UK resident for each of the 10 tax years before it ITTOIA 2005 s. 845B(1), inserted by FA 2025 s. 37
How long The first qualifying year and any of the next 3 tax years in which you are UK resident: up to 4 years, with no roll-over of unused years ITTOIA 2005 s. 845B(2)–(3); HMRC guidance
Income covered For example, profits of a trade carried on wholly outside the UK, overseas property profits, dividends from non-UK companies, interest on a foreign bank account; foreign gains through a separate claim HMRC guidance; ITTOIA 2005 s. 845A(2), (7)
Not covered Foreign employment income (Overseas Workday Relief may apply instead) HMRC guidance
How to claim In your Self Assessment tax return; you choose which sources to claim for ITTOIA 2005 s. 845A(4); HMRC guidance
Claim deadline Within 12 months starting with 31 January after the end of the tax year ITTOIA 2005 s. 845A(5)
What you lose for that year Personal Allowance and Blind Person’s Allowance, married couple’s and marriage allowance reductions, and the Capital Gains Tax annual exempt amount ITTOIA 2005 s. 845E, 845A(9); HMRC guidance

Who counts as a qualifying new resident

The law (section 845B of the Income Tax (Trading and Other Income) Act 2005, added by the Finance Act 2025) has three conditions for a tax year: you are UK resident under the statutory residence test, you are not disqualified (the disqualification covers members of the House of Commons or House of Lords), and you were not UK resident in any of the previous 10 tax years. Once you qualify, you stay a qualifying new resident for any of the next 3 tax years in which you are UK resident.

HMRC’s guidance adds that the regime runs for a maximum of 4 consecutive years from when your UK residence started. If you become non-resident for a year in the middle, you cannot claim for that year, and you cannot carry unused years forward.

If you arrived before 6 April 2025: HMRC says you can use the regime from the 2025–26 tax year up to the last year of your 4-year period. Its own example: someone resident from 6 May 2022 after 10 years abroad has only one year of eligibility, 2025–26.

What the relief does

Under section 845A, the relief equals the qualifying foreign income you identify in the claim, deducted when your net income is calculated. HMRC’s guidance says you will not pay tax on the eligible foreign income and gains you claim for. You do not have to claim for all your foreign sources.

The cost of claiming

The law takes away, for the year of the claim, the Personal Allowance and Blind Person’s Allowance, the married couple’s allowance and marriage allowance reductions, and the Capital Gains Tax annual exempt amount. HMRC’s guidance also says the claimed foreign income still counts when working out your adjusted net income, which is used for Tax-Free Childcare, Free Childcare for Working Parents and the High Income Child Benefit Charge. Under section 845C, if you claim, losses of a business carried on wholly outside the UK whose profits would be covered cannot be relieved in any year.

Sources

  1. Finance Act 2025, section 37, inserting sections 845A–845G into the Income Tax (Trading and Other Income) Act 2005 (legislation.gov.uk) checked 2026-10-25
  2. HMRC: Check if you can claim the 4-year foreign income and gains regime checked 2026-10-25
  3. GOV.UK: Tax on foreign income, 'Non-domiciled' residents checked 2026-10-25
  4. HMRC: Capital Gains Tax rates and allowances checked 2026-10-25

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