Eligibility for the FIG regime is at section 845B; the actual election is at section 845A and operates differently. The mechanics matter because clients often arrive at FIG-eligibility discussions expecting a single election covering the four-year window, when in practice the regime requires four separate per-year decisions with three allowances on the line each time. This page covers the s.845A mechanics verbatim, the FIG-specific 12-month deadline, the allowance-forfeiture cost, and the breakeven calculation that determines whether a claim is economically positive in any given year.

For the eligibility gateway (the s.845B(1) four cumulative conditions, the 10-year prior-non-residence test, the under-10 age-floor, and the s.845B(4) parliamentary disqualification carve-out), see the FIG eligibility pillar. For the post-window arising-basis transition (the year-5-onwards cliff), the dedicated post-window companion follows this page in the Wave 8 cluster.

The s.845A claim mechanism verbatim

Section 845A subsection (1) provides the substantive claim mechanism: "An individual may make a claim for relief for a tax year under this section (a 'foreign income claim')." The wording is permissive ("may make a claim"), not automatic. The relief is not granted by HMRC unless the taxpayer makes the claim; the absence of a claim defaults the individual to arising-basis taxation on their foreign income for that year, even where the s.845B(1) eligibility test is satisfied.

Section 845A subsection (2) provides that the claim must identify the qualifying foreign income. Section 845A subsection (3) provides the substantive relief: the amount of the relief is deducted in calculating the individual's net income for the tax year, with the deduction made at Step 2 of the income tax calculation under ITA 2007 section 23. Section 845A subsection (3A) restricts the deduction: "a deduction for that purpose is to be made only from qualifying foreign income". The FIG relief is hypothecated; it cannot be applied to UK-source income.

The Step 2 architecture and why allowances are forfeited

ITA 2007 section 23 sets the standard income tax calculation in five steps: Step 1 identifies total income; Step 2 deducts reliefs to produce net income; Step 3 deducts the personal allowance; Step 4 applies the relevant tax rates to taxable income; Step 5 produces the income tax liability.

The FIG relief is applied at Step 2. Qualifying foreign income that is the subject of a s.845A claim is deducted at Step 2, removing it from the calculation flow. By the time Step 3 applies, the foreign income is no longer in the calculation; the personal allowance applies only to whatever remains (typically UK-source income). The personal allowance was being applied to total income before deductions; after the FIG deduction the allowance has less to work against, and the FA 2025 architecture deliberately forces the PA forfeiture as a corollary.

The forfeiture is not a separate election. It is a structural consequence of the Step 2 mechanic. Three allowances are forfeited together: the personal allowance under ITA 2007 s.35; the dividend allowance under ITA 2007 s.13A; and the CGT annual exempt amount under TCGA 1992 Schedule 1 paragraph 1. The combined nominal value in 2026-27 is approximately £16,070. The forfeiture pattern is parallel to the historic remittance-basis claim under ITA 2007 s.809G; the FA 2025 architecture deliberately mirrors the remittance-basis cost for continuity.

The s.845A claim deadline: 12 months from 31 January

Section 845A subsection (5) provides the deadline: "A foreign income claim in relation to a tax year must be made before the end of the period of 12 months beginning with 31 January after the end of that tax year." The 31 January date is the standard self-assessment filing deadline for the tax year; the 12-month window then runs forward from that date.

For 2025-26, the deadline is 31 January 2028. For 2026-27, 31 January 2029. For 2027-28, 31 January 2030. For 2028-29, 31 January 2031.

The deadline is FIG-specific. It is shorter than the standard TMA 1970 section 43 four-year amendment window for self-assessment returns. Sessions should not rely on s.43 for late FIG claims. The s.43 window governs amendments to existing returns; it does not create new claim mechanisms that the substantive section's own deadline has not allowed for. Where the s.845A deadline passes without a claim being made, the FIG relief for that tax year is lost.

The breakeven calculation: when is FIG worth claiming?

The economic question for each tax year is whether the FIG saving (40% or 45% of qualifying foreign income, depending on marginal rate) exceeds the cost of the forfeited allowances. The forfeiture value for a higher-rate taxpayer in 2026-27:

  • Personal allowance forfeiture: £12,570 at 40% marginal rate = £5,028 of tax-saved-if-applied.
  • Dividend allowance forfeiture: £500 at 33.75% higher-rate dividend = £169 (only if the taxpayer would have dividend income to apply it against).
  • CGT annual exempt amount forfeiture: £3,000 at 24% residential rate = £720 (or £540 at 18% basic-rate CGT; or nil if no gains in the year).

Combined forfeiture cost for a higher-rate taxpayer with mixed income and gains: approximately £5,700 to £5,900 per year.

FIG saving on £X of foreign income at 40% = 0.40 × £X. Setting saving = forfeiture: 0.40 × £X = £5,800, so £X = £14,500. The breakeven foreign-income threshold for a higher-rate taxpayer is approximately £14,500. Below that, the FIG claim is economically negative (the forfeiture cost exceeds the FIG saving); above that, positive.

For additional-rate taxpayers (45% on income above £125,140), the breakeven is lower because the 45% marginal rate applies to the FIG saving as well as part of the PA forfeiture. For taxpayers with significant non-dividend, non-CGT foreign income, the forfeiture cost is lower (the dividend and CGT components do not apply). Sessions should run the calculation explicitly each year for each client; the breakeven moves with rate-band thresholds, allowance levels, and the mix of dividend versus interest versus rental versus gains in the qualifying foreign income.

Worked example: a returning UK national year by year

Take a hypothetical landlord, Singh-Patel, a UK-national fund manager returning to the UK on 6 April 2026 after 11 consecutive tax years in Hong Kong. He satisfies the s.845B(1) eligibility test in 2026-27 (continuously non-UK-resident 2015-16 to 2025-26 inclusive; over age 10; not disqualified). The four-year FIG window runs 2026-27 to 2029-30 inclusive. His projected foreign-income profile over the four years:

  • 2026-27: £45,000 of Hong Kong dividend and interest income (residual offshore portfolio).
  • 2027-28: £8,000 foreign income (portfolio mostly run down; the remaining £8,000 is Hong Kong interest on a savings account).
  • 2028-29: £52,000 (a one-time inheritance receipt of Singapore property income passes through to him during this tax year).
  • 2029-30: £6,000 (residual interest only).

2026-27 analysis. £45,000 foreign income at 40% marginal = £18,000 of FIG saving. Forfeiture cost £5,800. Net positive £12,200. Claim FIG.

2027-28 analysis. £8,000 foreign income at 40% = £3,200 of FIG saving. Forfeiture cost £5,800. Net negative £2,600. Do NOT claim FIG; take arising-basis treatment, apply PA and AEA normally.

2028-29 analysis. £52,000 foreign income at 40% (with some spilling into 45% additional-rate territory; for simplicity assume 40%) = £20,800 of FIG saving. Forfeiture cost £5,800. Net positive £15,000. Claim FIG.

2029-30 analysis. £6,000 foreign income at 40% = £2,400 of FIG saving. Forfeiture cost £5,800. Net negative £3,400. Do NOT claim FIG.

Optimal strategy: claim FIG for 2026-27 and 2028-29; take arising-basis for 2027-28 and 2029-30. Total FIG saving across the window: £27,200 net. A naive "claim every year" approach would lose money in two of the four years and net only £21,200 across the window. The year-by-year discipline is the difference between optimal and suboptimal use of the regime.

The qualifying foreign income definition at s.845H

The FIG relief operates only on "qualifying foreign income" as defined at ITTOIA 2005 section 845H. The definition covers a broad set of foreign-source income types: foreign rental property income (arising from non-UK situs property); foreign trade profits (with a foreign source); foreign pensions (under ITEPA 2003 Part 9); foreign interest (savings income with a non-UK paying entity); foreign dividends (from non-UK-resident companies); foreign annuities; and foreign discretionary trust distributions where the trust is non-UK-resident. The full list is at s.845H and is itemised in 22 or 23 distinct categories.

The "foreign" characterisation is source-based, not currency-based. Foreign income paid in sterling from a non-UK source is still foreign income. UK-source income paid in foreign currency to the individual is still UK income. The source-determination rules follow the standard income-tax framework (rental income source is where the underlying property is situated; interest source is typically the residence of the paying entity; dividend source is the residence of the paying company). Sessions should run the source-determination for each income stream before assuming FIG coverage; HMRC enquiry pattern frequently challenges source-characterisation in cross-border cases.

Section 845I (disqualified income) carves out specific income types that look foreign but are treated as UK-source for FIG purposes (typically anti-fragmentation provisions for income that has been routed offshore from a UK-source origin). The disqualified-income exclusion is narrow but worth verifying for any structured arrangements that channel UK-business profits through non-UK entities.

UK rental income remains on arising-basis

For landlord-readers, the key point is that UK rental income from UK situs property is UK-source income, not foreign income. The FIG relief does not exempt UK rental; it is taxed under the standard arising-basis rules whether or not the FIG claim is made for the year. The UK rental profit goes into the income-tax calculation at Step 1 (total income) as normal; FIG removes only foreign income at Step 2 and forfeits allowances at Step 3.

For a UK-based landlord with significant UK rental income and a smaller stream of foreign income, the FIG decision has a meaningful UK-side cost: the personal allowance forfeiture applies to the UK rental income as well. A landlord with £50,000 of UK rental profit and £15,000 of foreign income: claiming FIG forfeits the PA against the £50,000 UK rental, costing approximately £5,028 in additional UK rental tax; the £15,000 FIG saving (£6,000 at 40%) partly offsets but the net saving is £972, marginal. For the same landlord with £100,000 UK rental and £15,000 foreign income, the PA forfeiture against the UK rental costs the same £5,028 (PA tapers out from £100,000 anyway), so the analysis is closer to the pure foreign-income breakeven.

The interaction matters most where the UK rental profit lies in the £100,000 to £125,140 PA-taper range. In that range the PA is being progressively withdrawn by HMRC under the standard income-tax taper anyway; a FIG claim that forfeits the residual taper-affected PA has lower opportunity cost than for an individual squarely in the higher-rate band with full PA available.

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The per-year claim discipline

The s.845A claim is per tax year. The four-year window per s.845B(2) provides eligibility for up to four claims; the actual claims must be made one at a time, in each annual self-assessment return, before the s.845A deadline for that year. There is no batch-claim mechanism. There is no automatic better-of comparison between FIG and arising-basis. The taxpayer or their agent must run the breakeven for each year, decide whether to claim, and file accordingly.

Skipping years is permissible. An individual whose foreign income varies year by year can claim FIG in years 1 and 3 and not claim in years 2 and 4 (where the foreign income is below the breakeven). The unused years do not extend the four-year window; the window is fixed from the qualifying year per s.845B(2). But there is no penalty for failing to use the window in any specific year; the year is simply left on arising basis.

This per-year discipline differentiates FIG from the historic remittance basis. Under the remittance basis, the claim was per year too (ITA 2007 s.809B(1)), but the indefinite-window structure meant a missed year was effectively just one year of regular taxation rather than the structural loss of a window slot that FIG produces. The four-year FIG window is finite; each missed claim within the window is a permanent loss of relief.

How the FIG claim appears in the self-assessment return

Section 845A subsection (4) requires the claim to be made in a return as defined in subsection (10) (a personal return under TMA 1970 s.8). The mechanic is a return entry, typically on the residence and remittance supplementary pages (SA109) of the SA100 self-assessment return, in the "foreign income claim" section. HMRC's RDRM (Residence, Domicile and Remittance Manual) is being rewritten for FA 2025; the SA forms are similarly being updated. Sessions should verify the current form and box reference at the time of filing.

Where the original return omits the claim and the s.845A deadline has not yet passed, an amended return making the claim is acceptable under the standard TMA 1970 s.9ZA amendment procedure (within the s.9ZA amendment window, currently 12 months from the original 31 January filing deadline for non-discovery amendments). The s.9ZA window typically expires before the s.845A 12-month-from-31-Jan deadline (because s.9ZA runs from the original return's filing deadline; s.845A runs from 31 January after the tax year end). Sessions should verify both deadlines for any late-claim scenario.

The s.845A(6) consequential-claims restriction

Section 845A subsection (6) restricts consequential claims (downstream reliefs that depend on the FIG-claimed status) where carelessness or deliberation caused loss of tax. The provision targets cases where the FIG claim is later found to be wrong (eligibility under s.845B(1) was not actually satisfied, or the foreign-source characterisation under s.845H was incorrect) and HMRC's enquiry process establishes that the error was the result of careless or deliberate action by the taxpayer.

The restriction prevents the use of FIG to obtain consequential reliefs (e.g., loss-relief carryforwards, double-tax-relief credits) and then defend the FIG claim itself by reverse-engineering the eligibility. Sessions advising on the FIG claim should ensure: (i) the s.845B(1) eligibility is robustly evidenced (residence history under SRT for the 10 prior years; not disqualified under s.845B(4); age 10 or above at commencement); (ii) the foreign-source characterisation of the claimed income is robust (the income is qualifying foreign income under s.845H, not UK-source income misclassified); and (iii) the claim is filed within the s.845A deadline. A wrong claim plus a careless-or-deliberate finding closes the door on downstream relief routes.

What happens if the s.845A deadline is missed

The s.845A claim deadline is 12 months from 31 January after the end of the relevant tax year. After that date, the FIG claim for the missed year is lost permanently. The four-year window per s.845B(2) is not extended to compensate; the unused year is simply consumed. The TMA 1970 s.43 four-year amendment window for self-assessment returns does NOT provide a route back: s.43 governs amendments to existing returns, and a FIG claim that was never made in any return is not an amendment but a new claim that the substantive section's deadline has expired.

For taxpayers approaching the deadline, the practical decision is whether to file a protective FIG claim even where the breakeven analysis is borderline. A protective claim costs nothing if the calculation later confirms it was the right call; if the calculation shifts (e.g., the foreign income turns out to be larger than projected at the time of filing) and the breakeven moves positive in retrospect, the protective claim preserves the relief. Filing a protective FIG claim and later regretting it produces only the cost of allowances forfeited; failing to file and later realising the claim was worth making produces a permanent loss of relief for the year.

The protective-claim approach is generally safer at the margin; sessions advising should treat the FIG claim as something to file if there is reasonable expectation of foreign income at or above the breakeven threshold, and to skip only where the foreign-income shortfall is clear and substantial.

What this page does not cover

This page is the FIG election-mechanics companion. It does not cover: the s.845B(1) four cumulative conditions and eligibility analysis (the FIG eligibility pillar covers); the s.845B(2) four-year window definition (also the eligibility pillar); the year-5-onwards arising-basis cliff and post-window planning (the dedicated post-window page in this Wave 8 cluster covers); the TRF designation mechanics for pre-2025-26 foreign income held offshore (the TRF cluster covers); the IHT LTR test (the s.6A pillar covers).

Statutory and HMRC sources cited above: ITTOIA 2005 section 845A; ITTOIA 2005 section 845B; ITA 2007 section 23; ITA 2007 section 35; ITA 2007 section 13A; TCGA 1992 Schedule 1; ITA 2007 section 809G (historic remittance-basis allowance-forfeiture parallel); HMRC Residence, Domicile and Remittance Manual.