United Kingdom: the four-year FIG scheme, and the Inheritance Tax that follows long-term residents

Since April 6, 2025, the UK no longer taxes based on domicile but on residence. A new arrival who has not been a UK resident for at least 10 consecutive tax years can, upon request, benefit from the FIG (Foreign Income and Gains) scheme: a tax break on their foreign income and gains during their first four years of residence. Furthermore, once you are a long-term resident (10 years of residence out of the previous 20), your assets located outside the UK may be subject to Inheritance Tax. These two rules should be considered together.

What disappeared on April 6, 2025

Until April 5, 2025, a non-domiciled resident could be covered by the "remittance basis," a system based on domicile. As of April 6, 2025, this system is replaced by a system based on residence.

All UK residents are now taxed on their worldwide income and gains under the "arising basis" rule. The FIG regime is an exception, for a limited period.

The FIG regime, point by point

Here is what HMRC (the UK tax authority) states in its residency and FIG regime handbook:

HMRC describes the relief, in its reform publication of October 30, 2024 (written in the future tense, before it came into effect), as a "100% relief" on foreign income and gains for four years for newcomers who were not residents for the previous ten years. This is a relief, not a general exemption: the exact list of eligible income and gains can be found in the handbook.

The tax relief must be requested; it is not automatic, and its procedures are not discussed here. The supplementary provisions of the reform, such as the temporary repatriation process and the tax relief for working abroad, are also not detailed.

Counting down the years before arriving

To determine if you meet the 10-year non-resident requirement for tax purposes, each of those years must be assessed against the Statutory Residence Test. Spending 183 days or more in the UK during the tax year (from April 6th to April 5th) makes you a resident. A person who has been a resident in at least one of the three preceding years is considered a non-resident if they spend fewer than 16 days in the UK during that year. Other residency tests are assessed on a year-by-year basis. Our page on living in the UK explains them.

Inheritance Tax in brief

Inheritance Tax is the UK's estate tax. The standard rate is 40 %. It applies to the portion of the estate exceeding £325,000. According to GOV.UK, this threshold can be raised to £500,000 when the residence is passed on to children or grandchildren; the conditions are detailed on the official website.

In principle, no tax is due if the estate is below this threshold, or if the excess goes to the spouse, partner, charity or approved amateur sports club.

The long-term resident

From 6 April 2025, a person is a "long-term resident" for Inheritance Tax purposes when they are a UK tax resident for the year and have been so for 10 or more years in the previous 20 years (or in the previous 10 consecutive years).

The consequence is direct: assets located outside the United Kingdom may then be subject to Inheritance Tax upon transfer or death. For a French citizen residing in the United Kingdom, this could affect assets located in France.

GOV.UK also states that this status can be retained after leaving the UK, "for up to 10 tax years." The duration depends on the number of years of residence: according to GOV.UK, 3 years after departure for 10 to 13 years of residence, 4 years for 14 years, and 5 years for 15 years. The duration is shorter for someone who did not reside in the UK for the entire period. Other cases can be found on the GOV.UK page dedicated to long-term residents.

What this page doesn't say

The Franco-British convention on successions. The administrative list of conventions mentions a convention dated June 21, 1963, concerning successions, which is separate from the 2008 convention. Its content is not presented here, nor is its relationship to the British long-term residency rule. Therefore, do not assume that it protects your assets located in France.

The details of FIG. Income and earnings excluded from the relief, the application procedure and the fate of subsequent years of residence are not presented.

Numerical example (fictitious profile)

Situation. A Frenchman, a fictitious profile, has been living in the UK for 12 years. His total assets are £1,200,000, of which £400,000 are assets located in France.

Issue. He believes that the British Inheritance Tax only applies to his British assets.

Strategy. He checks his status: 12 years of residency out of the previous 20, exceeding the 10-year threshold. He is a long-term resident. He then calculates his tax liability both with and without his French assets.

Result. If French assets are included in the tax base, the inheritance tax is £350,000 ((1,200,000 − 325,000) × 40 %). On British assets alone (£800,000), it would be £190,000 ((800,000 − 325,000) × 40 %). The difference is £160,000, or £400,000 × 40 %. These figures are calculated before any relief, for example for a spouse, before any increase in the threshold and before the review of the 1963 convention. If he left the United Kingdom, his 12 years of residence would fall under the GOV.UK scale for 10 to 13 years: he would remain a long-term resident for 3 years after his departure, and not 10.

What changes depending on your situation

• The number of tax years of non-residence before your arrival, which opens or does not open the FIG regime.
• The number of years of residence out of the previous 20, which makes you a long-term resident.
• The nature and location of your property.
• The identity of your heir: spouse, partner, charity, or other.
• The potential role of a tax treaty between France and the United Kingdom.

These points are examined on a case-by-case basis. No tax results can be announced without this review.