Does claiming the UK FIG regime reduce my US tax?

No. The FIG regime is a UK relief only. A US citizen still reports worldwide income on Form 1040, including every item relieved in the UK. Because no UK tax is paid on FIG-relieved income, there is no foreign tax credit for it, and US tax on that income is paid in full to the IRS. The benefit, where there is one, is that total tax falls to the US level alone.

Who is a qualifying new resident for the 4-year FIG regime?

HMRC defines a qualifying new resident as someone who is UK resident for the tax year and was not UK resident for at least 10 consecutive tax years immediately before it. The status then continues for the next three tax years of UK residence. Nationality and domicile are irrelevant, a split year counts as a full year, and members of the House of Commons or House of Lords are excluded.

What is the deadline for making a FIG claim?

The claim is made on the Self Assessment return for the year and must be made by the anniversary of 31 January following the end of the tax year, which is 12 months after the normal filing date. HMRC's example is that a 2025-26 claim must be made by 31 January 2028. Claims can generally be amended or withdrawn within the same period, and each year requires its own claim.

Can I use UK tax on my salary as a credit against US tax on my US dividends?

No. The foreign tax credit limitation is calculated separately for each category of income on Form 1116. UK tax on employment income sits in the general category, while dividends and interest are passive category income. Excess general category credit can be carried back one year and forward ten, but only against general category income. US-source dividends also generate no credit limitation unless treaty re-sourcing applies.

Do I lose my UK personal allowance if I claim FIG?

Yes. A foreign income claim, a foreign gain claim or an Overseas Workday Relief election each removes the personal allowance and the Capital Gains Tax annual exempt amount for that year. For high earners the personal allowance is already nil, because GOV.UK confirms it is withdrawn completely once income reaches £125,140. Foreign capital losses realised in a claim year also cease to be allowable.

Are FBAR and Form 8938 still required in FIG years?

Yes. A FIG claim has no effect on US information reporting. The FBAR is required where foreign financial accounts exceed $10,000 in aggregate at any time in the calendar year, and Form 8938 applies above the higher thresholds for individuals living abroad. Both report accounts and assets rather than tax paid, so UK bank and investment accounts opened after arrival are reportable whether or not UK tax is relieved.

US Tax Return Preparation for Expats: UK FIG Regime

US tax return preparation for expats arriving in the UK changed on 6 April 2025, when the 4-year foreign income and gains (FIG) regime replaced the remittance basis. The short answer for an American is this: a FIG claim can remove UK tax on non-UK income and gains for up to four tax years, but it removes nothing from the US return. The United States still taxes a citizen on worldwide income, so the claim changes which country collects the tax and how the foreign tax credit is built, not whether the income is reported.

For most Americans the non-UK income in question is US-source: dividends and interest in a US brokerage account, US rental income and gains on US securities. Claim FIG on those and there is no UK tax to credit on Form 1116, but equally no double tax. In the returns we prepare for new arrivals, the real work is deciding, source by source and year by year, whether paying the US alone is cheaper than paying the UK first and crediting it. This article sets out the rules as HMRC and the IRS publish them, and where the two systems meet.

What is the UK 4-year FIG regime and who qualifies?

The FIG regime is a UK tax relief, available by claim, under which a qualifying new resident pays no UK tax on eligible foreign income and foreign gains arising in their first four tax years of UK residence. HMRC's guidance at https://www.gov.uk/guidance/check-if-you-can-claim-the-4-year-foreign-income-and-gains-regime confirms that it replaced the remittance basis on 6 April 2025. Since that date every UK resident is otherwise taxed on the arising basis on worldwide income and gains.

A qualifying new resident is an individual who is UK resident for the tax year and was not UK resident for at least 10 consecutive tax years immediately before it. HMRC's Residence and FIG Regime Manual at https://www.gov.uk/hmrc-internal-manuals/residence-and-fig-regime-manual/rfig44000 adds the details that matter in practice:

Nationality and domicile are irrelevant. A US citizen qualifies on the same residence test as anyone else, and so does a returning Briton after 10 tax years away.
The relief runs for a maximum of four consecutive tax years starting with the first year of UK residence. Unused years cannot be rolled forward.
A year in which split year treatment applies counts as a full year of UK residence for this test, so a mid-year arrival uses up year one in full.
Treaty non-residence is ignored. Being resident in the US under a treaty tie-breaker in an earlier UK year does not make that year a year of non-residence.
Leaving and returning inside the four years does not restart or extend the window. Years spent non-resident are simply lost.
Income and gains do not need to be kept offshore. HMRC states there is no UK tax charge when relieved amounts are brought to the UK.

Foreign here means non-UK. Eligible income includes dividends from non-UK resident companies, interest such as interest on a foreign bank account, profits of an overseas property business and profits of a trade carried on wholly outside the UK. Eligible gains are, broadly, gains on assets situated outside the UK that do not derive at least 75% of their value from UK land. UK salary, UK bank interest and UK property income are never covered. Foreign employment earnings are not covered either; those fall under Overseas Workday Relief, discussed below.

How is a FIG claim made, and what is the deadline?

A FIG claim is made on the Self Assessment tax return for the tax year it relates to. There is no automatic relief and no de minimis: HMRC's manual at https://www.gov.uk/hmrc-internal-manuals/residence-and-fig-regime-manual/rfig42100 says that for the relief to apply to any amount of income or gain, that amount must be included within a claim. The mechanics are stricter than many new arrivals expect:

A claim can be made for foreign income, for foreign gains, or for both.
Claims are made on a source-by-source basis. A claim on US dividend income does not relieve US interest or US rental profits unless those are separately declared and claimed.
Every amount must be quantified on the return. HMRC states that quantifying a claim incorrectly does not invalidate it, but not quantifying it at all does.
A claim for year one does not carry into years two, three or four. Each year needs its own claim, and a year can be skipped without losing the later years.
You can choose which sources to claim on. You do not have to claim on everything.

The time limit is the anniversary of 31 January following the end of the tax year, which is 12 months after the normal Self Assessment filing date. HMRC's example at https://www.gov.uk/hmrc-internal-manuals/residence-and-fig-regime-manual/rfig42300 is that a claim for 2025-26 must be made by 31 January 2028. A claim can generally be amended or withdrawn within the same window. HMRC also notes there is no statutory discretion to accept late FIG claims outside its general late claims policy, so this is a deadline to diarise rather than test.

What does a FIG claim cost on the UK side?

Claiming FIG costs the individual their UK personal allowance and Capital Gains Tax annual exempt amount for that tax year. HMRC's manual at https://www.gov.uk/hmrc-internal-manuals/residence-and-fig-regime-manual/rfig43000 lists the full set of consequences, and they apply whether the claim is for income only, gains only, or an Overseas Workday Relief election alone:

Loss of the personal allowance, the blind person's allowance, the married couple's tax reduction and the transferable marriage allowance.
Loss of the Capital Gains Tax annual exempt amount for the year.
Foreign capital losses accruing in a claim year cease to be allowable losses. They are not carried forward.
Losses of an overseas trade or overseas property business for a claim year get no relief in that year or any other year.
Relieved foreign income still counts towards adjusted net income, which drives the High Income Child Benefit Charge and childcare entitlements.

Here is a point most published guides miss. GOV.UK states at https://www.gov.uk/income-tax-rates that the standard personal allowance is £12,570, that it reduces by £1 for every £2 of adjusted net income above £100,000, and that it is zero once income reaches £125,140. An investment banker on a London salary well above that level has no personal allowance to lose. For that client the UK price of a FIG claim is usually the £3,000 annual exempt amount, which only matters if there are UK gains in the year, plus the forfeited foreign losses. The loss rule is the one that bites: a FIG claim in a year when the US portfolio is showing net realised losses throws those losses away for UK purposes.

How does the FIG regime change US tax return preparation for expats?

On the US side, nothing is excluded. A US citizen reports worldwide income on Form 1040 whether or not the UK taxes it, and a FIG claim is a UK relief with no counterpart in the Internal Revenue Code. What changes is the credit position. The foreign tax credit gives credit for foreign income tax actually paid or accrued. Where FIG removes the UK tax on an item, there is no UK tax on that item to credit, and the US tax on it is paid in full to the IRS.

That is not double taxation, and for US-source investment income it is often the better result. Without a FIG claim, the UK taxes a UK-resident American on US dividends, interest and gains at UK rates and gives credit for US tax only up to the amount the US could charge a UK resident who is not a US citizen. That limit is written into Article 24(6) of the US-UK income tax treaty, published at https://home.treasury.gov/system/files/131/Treaty-UK-7-24-2001.pdf. The US then credits the remaining UK tax against its own tax on the same income, which the treaty treats as UK-source for that purpose. The outcome is a three-step computation in which the combined bill tends to settle at the higher of the two countries' rates. With a FIG claim the computation collapses to one step: US tax only.

FIG matters most in two places. The first is US-source income that the UK would otherwise tax at rates above the US rate, typically interest and dividends for an additional-rate taxpayer. The second is third-country income, such as interest on a Swiss account or rent from a property in another jurisdiction, where without FIG the UK, the US and possibly the source country would each have a claim and two sets of credits would need to be reconciled.

Why can UK tax on a London salary not offset US tax on FIG-relieved investment income?

Because the foreign tax credit is limited separately for each category of income. The IRS instructions at https://www.irs.gov/instructions/i1116 require a separate Form 1116 for each category. Wages and salary earned as an employee fall in the general category. Dividends, interest and most portfolio gains fall in the passive category. Income re-sourced under a treaty has a category of its own. Credits generated in one category cannot be applied against US tax on income in another.

A banker paying UK tax at 45% on a London salary will normally generate more general category credit than the US tax on that salary can absorb. IRS Publication 514 at https://www.irs.gov/publications/p514 allows unused foreign tax to be carried back one year and forward ten, but only within the same category. So in FIG years the pattern we see is a growing general category carryover sitting unused on Schedule B of Form 1116, alongside a cash payment to the IRS on portfolio income. The two do not net. There is a second, more basic reason as well: US dividends and US interest are US-source income, and the credit limitation is computed on foreign-source income only. Without UK tax and treaty re-sourcing, there is nothing for a credit to attach to.

Does claiming FIG affect US-UK treaty benefits?

This is the least settled part of the analysis, and we flag it as an open point. Article 1(7) of the treaty limits treaty relief where a person is taxed in the other country by reference to the amount remitted or received there rather than the full amount. In that case relief in the first country applies only to the part actually taxed in the other. The provision was written for the remittance basis. The FIG regime is not a remittance basis: income is relieved by claim regardless of where the money goes. We have not found published guidance on gov.uk, irs.gov or treasury.gov stating whether Article 1(7), or any similar limitation, applies to FIG-relieved income, so we do not treat it as resolved either way.

Two points are clearer. First, HMRC's manual states that an individual who is resident under the statutory residence test is resident for the purposes of Article 4(1) of double taxation agreements, and that a FIG claim does not change that determination. Second, the practical exposure for a US citizen is narrower than for other nationalities. Under the saving clause in Article 1(4), the US taxes its citizens largely as if the treaty were not in force, so a US citizen is not claiming reduced US withholding on US dividends in the first place. The Article 1(7) question is more live for a non-US spouse who is UK resident, claims FIG, and has claimed treaty rates on US-source income. The treaty documents are listed at https://www.irs.gov/businesses/international-businesses/united-kingdom-uk-tax-treaty-documents.

Overseas Workday Relief and the Temporary Repatriation Facility in brief

Overseas Workday Relief (OWR) is the employment-income counterpart to FIG. From 6 April 2025 eligibility follows the same qualifying new resident test, and the employee must make an OWR election for the year. HMRC's Employment Income Manual at https://www.gov.uk/hmrc-internal-manuals/employment-income-manual/eim43600 sets an annual financial limit: relief is capped at the lower of 30% of the relevant qualifying employment income or £300,000. On the US return, OWR reduces the UK tax on the salary and therefore the general category credit. Days worked in the United States produce US-source wages, which attract no foreign tax credit in any event, so OWR on US workdays tends to remove a genuine double tax rather than create a US liability.

The Temporary Repatriation Facility (TRF) is for former remittance basis users with pre-6 April 2025 foreign income and gains, not for new arrivals. HMRC's manual at https://www.gov.uk/hmrc-internal-manuals/residence-domicile-and-remittance-basis/rdrm73400 gives the charge as 12% of amounts designated in a return for 2025-26 or 2026-27 and 15% for 2027-28. HMRC describes the TRF charge as a charge on capital, not a tax on income or gains, and says no credit for foreign tax is available against it. Whether the charge is a creditable income tax for US purposes is a separate US question that should be analysed before any designation is made by a US citizen.

Should the foreign earned income exclusion or the foreign tax credit be used in FIG years?

The foreign earned income exclusion applies to earned income only. It does nothing for dividends, interest, rent or gains, so it cannot shelter the income that FIG relieves on the UK side. For a high earner taxed in the UK at 45%, the foreign tax credit normally covers the US tax on the salary in full and leaves a carryover, while the exclusion would use up part of that credit base and leave the income above the exclusion limit taxed at higher bracket rates. IRS Publication 54 at https://www.irs.gov/publications/p54 also records that a taxpayer who revokes the exclusion cannot claim it again for the next five tax years without IRS approval. In the returns we prepare for FIG claimants, the credit route on earned income is the usual starting point, and the choice is tested against OWR, which lowers UK tax on the same salary.

How do the UK tax year and the US calendar year line up?

The UK tax year runs from 6 April to 5 April. The US return follows the calendar year. Four FIG years therefore touch five US returns. Someone whose first UK tax year is 2026-27 has FIG years ending on 5 April 2030, and US returns for 2026 through 2030 each contain a mix of FIG-period and non-FIG-period income. Publication 514 explains that foreign tax generally accrues on the last day of the foreign tax year, so a taxpayer claiming the credit on the accrual basis picks up UK tax for the UK year ending within the US year.

Three timing points come up in every engagement. The US brokerage issues Forms 1099 on a calendar-year basis, but the FIG claim must quantify each source for the UK tax year, so transaction-level data is needed. The UK computes gains in sterling using exchange rates at acquisition and disposal, so the UK gain on a US security rarely equals the US gain. And the FIG claim window stays open for 12 months after the UK filing date, which means the claim can be finalised, amended or withdrawn after the corresponding US returns have been prepared and the real numbers are known. Publication 54 confirms the automatic two-month extension to 15 June for citizens living abroad and the further extension to 15 October on Form 4868.

Worked illustration: a US investment banker arriving in London in 2026

This is an illustration with assumed figures, not a client case. A US citizen banker moves to London on 1 September 2026 after more than ten tax years of non-UK residence. The tax year 2026-27 is year one even if split year treatment applies, so the FIG years are 2026-27, 2027-28, 2028-29 and 2029-30. The claim deadline for 2026-27, applying HMRC's rule, is 31 January 2029. Take 2027-28 as a full year. Assumptions: UK salary well above £125,140, so no personal allowance is available with or without a claim. A US brokerage account produces $60,000 of qualified dividends, $20,000 of interest and $120,000 of long-term gains. No UK gains, no foreign losses. For simplicity the same dollar amounts are used for both countries, UK and US periods are treated as aligned, and the £500 dividend allowance and exchange differences are ignored. Assumed US rates are 20% on qualified dividends and long-term gains, 37% on interest and the 3.8% net investment income tax on all three.

With FIG claimed on all three sources, UK tax on the portfolio is nil. US tax is $12,000 on dividends, $24,000 on gains, $7,400 on interest and $7,600 of net investment income tax: about $51,000, all paid to the IRS, with no credit claimed and none needed. Without a claim, and applying the UK rates published on GOV.UK for 2026-27 purely for illustration (39.35% on dividends at the additional rate, 45% on interest, 24% on gains), UK tax before credits is roughly $61,400. Assuming the treaty rate the US could charge a non-citizen UK resident is 15% on the dividends and nil on the interest and gains, the UK credits $9,000 of US tax and collects about $52,400. The US keeps the $9,000, credits UK tax against the rest of its regular tax, and, on the IRS's stated approach to the net investment income tax, still collects $7,600. Combined: roughly $69,000 against $51,000 with the claim.

On those assumptions the claim saves about $18,000 for the year and replaces three Forms 1116 and a treaty re-sourcing computation with a straightforward US calculation. Change one assumption and the answer moves. If the portfolio realised a net loss in the year, a claim on income would forfeit the UK use of that loss. If the banker also sold UK-situs assets at a gain, the £3,000 annual exempt amount would be lost. That is why the decision is run per source and per year, on both returns side by side.

Records to keep, and what does not change

FBAR and Form 8938 reporting are unaffected by a FIG claim. They report accounts and assets, not UK tax paid. The IRS comparison at https://www.irs.gov/businesses/comparison-of-form-8938-and-fbar-requirements confirms that the FBAR applies where the aggregate value of foreign financial accounts exceeds $10,000 at any time in the calendar year, and that Form 8938 applies to an unmarried individual living abroad above $200,000 on the last day of the tax year or $300,000 at any time. New UK current and savings accounts opened on arrival usually bring a banker within both. The records we ask FIG claimants to hold are:

Evidence of non-UK residence for each of the 10 tax years before arrival, including day counts and any earlier UK work periods.
The date UK residence began and the split year analysis, since the year of arrival counts in full.
Per-source schedules of foreign income and gains for each UK tax year, reconciled to calendar-year Forms 1099.
Sterling computations of gains with the exchange rates used, kept next to the dollar basis used on the US return.
A copy of each Self Assessment return showing the claim as filed, and any amendment or withdrawal with its date.
Form 1116 category workings and carryover schedules for every year, including years with no claim.
A UK and non-UK workday calendar if an Overseas Workday Relief election is in point.

The failure mode we see most often is a UK-only calculation that claims FIG on everything, followed months later by a US return showing tax due that nobody budgeted for. The second is the reverse: no claim made because the US taxes the income anyway, with UK tax then paid at rates the US credit could not fully absorb. Both are avoided by preparing the two returns together and settling the FIG claim only once the US numbers are final.