The FIG Regime Mistakes That Cost Real Money: Eight Traps We See in Practice

Each of these comes up repeatedly with people in their first four UK-resident years. The table summarises the lot; the rest of the guide takes them one at a time.

What people do: arrive in the UK, hear that the first four years of foreign income are tax free, and conclude that nothing needs reporting. Some leave foreign income off the return; some never register for Self Assessment.

Why it is wrong: the relief only exists inside a claim. You claim each year on the SA109, box 28 for foreign income and box 29 for foreign gains, and helpsheet HS266 requires every relieved amount to be reported source by source on the SA106 foreign pages or SA108 gains pages (HS266, GOV.UK). HMRC's manual adds that there is no de minimis or automatic application of the relief, that a claim for year 1 will not automatically apply to years 2, 3 or 4, and that a claim which is not quantified at all is invalid (RFIG42100, HMRC). No valid claim means the income is simply undeclared taxable income of a UK resident, which is how enquiries, penalties and interest start.

What to do instead: register for Self Assessment, file for every year you want relief, tick the claim boxes and quantify each source. Our SA109 walkthrough covers the boxes and records in detail.

What people do: claim because the relief is available, without checking whether it actually saves money that year.

Why it is wrong: claiming has a fixed price. For any year you claim, you give up your £12,570 Personal Allowance and the £3,000 Capital Gains Tax annual exempt amount in full, plus blind person's allowance and the transferable marriage allowance, even if you claim on foreign income only or gains only (HS266, GOV.UK). Take a £60,000 UK salary plus £2,000 of foreign interest: relieving the interest saves at most £800 at 40%, while losing the Personal Allowance costs around £5,028, leaving them roughly £4,200 worse off.

What to do instead: run the arithmetic every year. The claim is annual and optional, so claim in the years when foreign income is large and skip the rest. High earners over £125,140 have no Personal Allowance to lose, which often tips the balance the other way.

What people do: assume that roughly a decade abroad qualifies them, and that their four years started when the regime did.

Why it is wrong on the 10 years: eligibility needs at least 10 consecutive tax years of non-UK residence immediately before you became UK resident, each judged under the Statutory Residence Test (GOV.UK). A single UK-resident year inside that run, perhaps an accidental one, breaks the sequence and restarts the count. Nine and a half years is not ten, and a resident year seven years ago can still sink the claim.

Why it is wrong on the 4 years: the window is fixed from your first year of UK residence, even if that year fell before the regime existed on 6 April 2025, and a split year of arrival still burns a full year of the window. The regime cannot be claimed for years before 2025/26, so earlier arrivers can only claim for whatever remains of their original window (GOV.UK).

What to do instead: reconstruct your residence history year by year before anything is filed. If you first became resident in 2023/24, this year, 2026/27, is your last chance to claim; plan accordingly.

What people do: defer a foreign bonus, hold off selling an overseas investment, or leave dividends rolling up in a company, and assume the relief will be waiting whenever the money arrives.

Why it is wrong: relief only covers foreign income and gains that arise on or after 6 April 2025, in a tax year for which you are a qualifying new resident and actually make the claim (HS266, GOV.UK). A disposal realised in your fifth year of residence gets nothing, however carefully you claimed in years one to four. Equally, income that arose before 6 April 2025 can never be relieved, whatever year you receive or use it. The window does not pause if you leave the UK mid-way, and unused years are lost, not banked.

What to do instead: treat the final claim year as a hard deadline for realising foreign income and gains. If a large disposal, dividend or distribution is coming, bring it inside a claimed year where commercially possible, and have that conversation early in the window, not in its final January.

What people do: American arrivers see four years of tax-free foreign income and assume the saving applies across the board.

Why it is wrong: FIG is a UK relief and touches nothing else. The United States taxes its citizens on worldwide income wherever they live, so the dividends, interest and gains the UK relieves remain reportable and taxable on the US return. And because a FIG claim means little or no UK tax is paid on that income, there is little or no UK tax to credit against the US bill, so the US side often collects what the UK gave up. The claim can still be worthwhile, but the genuine saving is the difference between the two systems' rates, not the whole UK tax.

What to do instead: model the UK and US positions together before claiming, not after. We handle the UK side and coordinate the US filings through our US partners, Enrolled Agents and CPAs, so the two returns tell one consistent story.

What people do: veterans of the old non-dom rules keep their relieved foreign income parked offshore, afraid that transferring it to a UK account will trigger tax, and structure their banking in knots to avoid a remittance that no longer matters.

Why it is wrong: the remittance trap died with the remittance basis on 6 April 2025. Income and gains relieved under a FIG claim can be brought to the UK and spent freely with no UK tax charge; our comparison of the two systems sets out the full contrast. The one genuine caution is old money: pre-6 April 2025 foreign income and gains of former remittance-basis users are still taxable if remitted, unless designated under the Temporary Repatriation Facility while its reduced rates last.

What to do instead: separate the pools. New money relieved under FIG can move freely; old remittance-era money needs its own plan, ideally a TRF designation while the 12% rate still applies in 2026/27. Do not let fear of the old rules stop you using the new ones.

Mistake 7 is folding foreign salary into the FIG claim. Foreign employment income is not covered by the box 28 foreign income claim at all: earnings for duties performed outside the UK are relieved through Overseas Workday Relief, which needs its own election on the SA109 and is capped for each year at the lower of 30% of qualifying employment income and £300,000 (GOV.UK). An executive who ticks box 28 and assumes their overseas workdays are covered has claimed nothing on their salary, and duties beyond the cap mean UK tax on the excess. Count workdays contemporaneously and make the election deliberately; it costs the same allowances as a FIG claim.

Mistake 8 is leaving the filing route until January. The SA109 pages that carry every FIG and OWR claim cannot be filed through HMRC's free online Self Assessment service; GOV.UK points instead to paper, commercial software or a tax professional (GOV.UK). Paper returns must reach HMRC by 31 October, three months before the online deadline, so December discoveries have already lost the paper route. Decide now: commercial software that supports the SA109, or an agent, filing by 31 January. Our guide to why the SA109 cannot be filed on HMRC's website covers the options and penalties in full.

All eight mistakes are avoidable with the same habit: check the rules against your own dates and numbers before assuming anything. That is our daily work, on fixed fees agreed upfront, from eligibility review to filed SA109.