Foreign Income and Gains Regime (FIG) – 2026 Tax Return considerations

The 2025–26 UK tax year marked a fundamental shift in the taxation of internationally mobile individuals, with the abolition of the remittance basis and the introduction of the Foreign Income and Gains (FIG) regime. This reform has materially changed how foreign income and gains are reported in the UK Self Assessment (SA) tax return for 2026.

The new system is rooted in tax residence rather than domicile and significantly increases disclosure obligations.

Core features of the FIG Regime

The FIG regime provides a limited relief for certain individuals, known as “qualifying new residents.” These are individuals in their first four years of UK residence after at least 10 consecutive tax years of non-UK residence.

Where a valid claim is made, eligible foreign income and gains are exempt from UK tax for that year, and can be brought into the UK without triggering a tax charge.

However, this relief does not remove the obligation to report. Instead, the system operates as a “report then relieve” model: the taxpayer must disclose foreign income and gains and then claim relief within the return.

Structure of the 2026 Tax Return

The 2026 Self-Assessment incorporates the FIG regime through a combination of forms and supplementary pages:

1. SA106 – Foreign pages

The SA106 “Foreign” pages are central to reporting foreign income. Taxpayers must include details of overseas income, such as interest, dividends, and property income.

Importantly, all relevant foreign income must be reported even if relief under the FIG regime is being claimed.

2.SA109 – Residence and FIG regime pages

Claims under the FIG regime are made through the SA109 supplementary pages, specifically the section titled “Residence and foreign income and gains (FIG) regime etc.”

Key boxes include:

• Box 28 – claim for foreign income relief
• Box 29 – claim for foreign gains relief
• Box 30 – certain UK income treated as foreign under specific rules

A claim must be made annually for each year relief is sought; it is not automatic.

3.Supporting schedules

Depending on the nature of the income, additional supplementary pages may be required (e.g. SA108 for capital gains, SA107 for trusts).

The 2026 tax return reporting process in practice

The practical workflow for completing a 2026 tax return under the FIG regime can be summarised as follows:

1. Determine UK residence status using the Statutory Residence Test.
2. Identify all foreign income and gains arising in the tax year.
3. Report gross amounts on the SA106 and relevant pages, categorised by source and country.
4. Compute UK tax liability on the arising basis (before relief).
5. Make a FIG claim via SA109, specifying the amounts eligible for relief.
6. Apply relief to eliminate the UK tax charge on qualifying amounts.

This approach reflects HMRC’s expectation of full disclosure followed by targeted relief, rather than selective reporting.

FIG and Making Tax Digital (MTD)

HMRC has delayed the Making Tax Digital (MTD) requirement until April 2027 for certain individuals who need to submit information on the SA109 supplementary pages of their tax return. This delay reflects the complexity of the FIG regime, however fundamentally, FIG income becomes subject to MTD from the point the taxpayer meets the MTD threshold and has qualifying income within scope, regardless of whether that income is ultimately taxed.

HMRC has however confirmed that taxpayers who completed pages SA109 in their 2024/25 tax return will be granted a one-year automatic deferral. This means even if your MTD sole trade / rental income in 2024/25 exceeded the £50,000 threshold, they would not need to join MTD until April 2027.

If the taxpayer did not file the SA109 pages in 2024/25 but does have reasonable grounds to expect they will need to file these pages in 2026/27, you can apply for a similar one-year deferral. However, this deferral is not automatic.

Increased transparency and compliance

One of the most significant impacts of the new FIG regime is the expanded reporting obligation. Under the old remittance basis, it was often possible to omit offshore income that remained outside the UK. Under the FIG regime, this is no longer the case.

HMRC now expects:

• Comprehensive disclosure of global income streams
• Clear identification of amounts subject to FIG relief
• Consistency between reported figures and claims

Failure to report income correctly, even where no tax is due, may expose taxpayers to enquiries or penalties.

Interaction with other reliefs

The reporting framework also interacts with other mechanisms, including:

• No UK personal allowance (£12,570 for 2025/26 and 2026/27)
• No Capital Gains Tax annual exemption (£3,000 for 2025/26 and 2026/27).
• Foreign Tax Credit Relief (FTCR) – can still be claimed via SA106 where foreign tax has been paid
• The Temporary Repatriation Facility (TRF) for pre-2025 income (reported separately if relevant)

Taxpayers must ensure that reliefs are not double-counted and that claims are clearly delineated between FIG relief and other reliefs.

Temporary repatriation facility ‘TRF’

The Temporary Repatriation Facility (TRF) is a transitional measure introduced alongside the abolition of the remittance basis, and it applies for a limited three‑year period from 6 April 2025 to 5 April 2028.

Its purpose is to encourage individuals who previously used the remittance basis to bring historic offshore income and gains into the UK at a preferential rate of tax, rather than at full marginal rates. The TRF is only relevant to amounts that arose before 6 April 2025, meaning it does not apply to foreign income and gains arising under the new FIG regime. To qualify, the funds must represent “qualifying overseas capital,” which broadly includes foreign income, foreign chargeable gains, and certain trust distributions that were generated in years when the remittance basis applied and which have not previously been taxed in the UK. These amounts must be clearly identifiable as offshore funds and typically need to be nominated or designated by the taxpayer when making a TRF claim.

In practice, this often requires careful tracing and segregation of funds within mixed bank accounts to distinguish eligible capital from other monies. Once designated, qualifying overseas capital can be remitted to the UK during the TRF window and taxed at a reduced rate, providing a one-off opportunity to “cleanse” historic offshore wealth. After the TRF period ends, any unremitted pre-2025 foreign income and gains will generally be subject to normal UK taxation if brought into the UK, making timing and accurate identification of qualifying capital critical for affected taxpayers.

Designations must be made on the self-assessment tax return, again via the SA109 tax return pages. The final deadline is the same deadline for amending the tax return, i.e. the first anniversary of 31 January following the end of the tax year.  For example, the final deadline for making a designation for the 2025/26 tax year is 31 January 2028.  Following this time limit, designations cannot be amended or withdrawn.

How CAn aab help?

The 2026 UK tax return introduces a fundamentally different approach to foreign income and gains reporting. The abolition of the remittance basis and the introduction of the FIG regime have shifted the system to one of full disclosure with conditional relief. In practical terms, taxpayers must now report all foreign income and gains on the arising basis via SA106 and related pages, and then actively claim relief through SA109 where eligible. This creates a more transparent but more compliance-intensive system, requiring careful identification, categorisation, and disclosure of all offshore income streams.

For practitioners and taxpayers alike, the key challenge is no longer whether foreign income should be reported— but rather ensuring this is reported correctly, particularly where there are historic unremitted overseas sources, which can also benefit from the new TRF regime. framework. For more information on FIG, MTD or TRF, please contact Lynn Gracie, Carol Edwards or any member of your usual AAB contact.