21/03/2025
Navigating FIG and TRF: What Americans in the UK Need to Know About the New Tax Regimes
The UK’s overhaul of its tax system for non-domiciled individuals (non-doms) has created a seismic shift in how foreign income and gains are taxed. For Americans living in the UK — many of whom have long relied on the remittance basis — the introduction of the Foreign Income & Gains (FIG) and Temporary Repatriation Facility (TRF) regimes from April 2025 means rethinking how they manage their global finances.
In this post, we break down what these new regimes mean for Americans in the UK, and how you can make the most of them while navigating the ever-complicated US-UK tax landscape.
________________________________________
1. A Quick Recap: Why This Matters for Americans in the UK
For years, non-doms living in the UK could opt for the remittance basis, allowing them to only pay UK tax on foreign income and gains (FIG) brought into the UK. For Americans — who are taxed worldwide by the IRS regardless of where they live — this offered a crucial tool to avoid being double-taxed on foreign income.
However, with the remittance basis set to disappear from April 2025, and the new FIG and TRF regimes taking its place, Americans in the UK must now recalibrate.
________________________________________
2. What Is the FIG Regime?
The Foreign Income & Gains (FIG) regime is a 4-year relief for new UK tax residents who have not been resident in the UK for the previous 10 years. Under FIG:
• Foreign income and gains are exempt from UK taxation for the
4-year window, regardless of whether they are brought to the UK.
• UK income and gains remain fully taxable.
• After the 4-year period, individuals become fully subject to UK tax on worldwide income and gains — no more remittance basis.
For Americans, this means they may still owe US tax on their foreign income, but UK tax may be deferred or eliminated for that period under FIG. Crucially, US-UK tax treaty provisions and foreign tax credits (FTCs) will continue to play a vital role in coordinating tax liabilities between the two countries.
Key consideration: Americans using FIG need to carefully structure their foreign investments to avoid unnecessary tax exposure when FIG ends.
________________________________________
3. What Is the TRF (Temporary Repatriation Facility)?
The Temporary Repatriation Facility (TRF) is a two-year window (2025-2026) that allows non-doms to remit previously untaxed foreign income and gains to the UK at a flat tax rate of 12% — far lower than the usual income tax rates (which can go up to 45%).
For Americans, TRF presents a strategic opportunity to "clean up" offshore accounts and bring funds into the UK at a reduced tax cost, potentially aligning with US tax timing.
Important: Because Americans are taxed on worldwide income by the US, any repatriated funds may already have been taxed in the US, but planning the interaction between TRF and US tax rules (e.g., foreign tax credits, timing of recognition) will be essential to avoid missteps.
________________________________________
4. What Should Americans in the UK Be Doing Now?
With these changes looming, here are some action steps for Americans living in the UK:
a. Review Your Domicile and Residency Status
- Confirm whether FIG applies — it’s only for those who haven't been UK tax residents for 10 years.
- Review US tax home and residency ties — potential impact on US tax filing.
b. Map Out Your Foreign Income and Gains
- Identify what’s been earned and where it sits (bank accounts, trusts, investments).
- Consider whether and when to realize gains, especially before the remittance basis ends.
c. Plan for the TRF
- Calculate the value of foreign income and gains that could be repatriated under TRF.
- Coordinate UK and US tax implications, including FTCs and timing of reporting.
d. Coordinate with Dual-Qualified Advisers
- Given the complex overlap between UK and US tax systems, working with advisers familiar with both jurisdictions is essential to avoid costly mistakes.
________________________________________
5. Trusts and Inheritance Planning: Don't Overlook the Knock-On Effects
Many Americans in the UK use foreign trusts for wealth planning. Under the new rules:
- FIG-qualifying individuals may enjoy protection from UK tax on FIG in trusts during the 4-year period.
- But after that, trust gains and income could become fully taxable in the UK, which could create double-tax risks if not carefully managed.
Also, UK inheritance tax (IHT) exposure could change dramatically if an American becomes deemed domiciled after living in the UK for 10+ years.
Tip: Now is the time to review existing trust structures, especially regarding distributions and how they interact with both FIG and TRF.
________________________________________
6. Final Thoughts: A Narrow Window of Opportunity
The combination of FIG and TRF offers Americans in the UK a limited-time opportunity to:
- Shield foreign income and gains from UK tax for up to 4 years.
- Remit historic offshore income to the UK at favorable rates.
- Reassess and restructure global holdings before becoming fully exposed to UK taxation.
However, as with all things in cross-border tax, the devil is in the details. Figuring out how to align FIG and TRF with US tax obligations, including Foreign Account Tax Compliance Act (FATCA) reporting, Controlled Foreign Corporation (CFC) and Passive Foreign Investment Company (PFIC) issues, will require careful attention.
________________________________________
Need Help?
If you’re an American living in the UK and wondering how to approach FIG and TRF — and what these new rules mean for you and your family — now is the time to seek professional advice.
The tax landscape is changing, but with early action and the right strategy, it’s possible to minimize exposure and make the most of the available reliefs.
________________________________________
Disclaimer: This blog is for informational purposes only and does not constitute legal or tax advice. You should consult with a qualified adviser to discuss your specific circumstances.
