The FIG regime gives qualifying new residents up to four tax years of exemption on foreign income and gains. At the start of the fifth tax year the relief stops. The drop is binary: from full exemption to full arising-basis. The historic remittance-basis route at ITA 2007 section 809B (which would have provided a continuing offshore-shielded position for a long-term non-dom) is not available because Finance Act 2025 section 40 abolished it from tax year 2025-26 onwards. The cliff is therefore real, and the four years of FIG access are the entire window of cross-border tax flexibility for a new arrival.

The planning value lives in those four years. Three structural levers are available to a non-LTR-non-dom new arrival within the FIG window: gifting non-UK situs assets while still outside the IHT worldwide-asset scope; settling non-UK assets into an offshore trust while the settlor's LTR status would lock in excluded-property treatment under IHTA 1984 s.48ZA(2); and accelerating foreign-income receipts into the FIG-exempt years. This page covers the s.845B(2) cliff verbatim, walks each pre-cliff lever in operational detail, distinguishes FIG from the TRF (which serves a different population), and runs a worked pre-cliff timeline for a typical landlord-new-arrival.

The s.845B(2) four-year window verbatim

Section 845B(2) provides the duration of FIG eligibility: an individual who is a qualifying new resident for a tax year (the qualifying year) remains a qualifying new resident for the next three tax years after that, subject to the s.845B(1) continuing conditions in each year. The four-year window is consecutive from the qualifying year and runs forward; an individual whose qualifying year is 2026-27 has FIG eligibility for 2026-27, 2027-28, 2028-29, and 2029-30.

The four years are the maximum. Failing to claim FIG in a year within the window does not extend the window (the unused year is simply consumed; the window remains 4 years). Departing the UK in years 2 or 3 ends the current window early; on the s.845B(1) eligibility test, a fresh qualifying year is only available where the individual has been non-UK resident for 10 consecutive subsequent tax years. So early departure does not bank year-5 access for a later return.

What changes at the start of year 5

From the start of the fifth tax year onwards the individual is taxed on the arising basis as a standard UK resident. Three substantive shifts run together:

  1. Foreign income becomes UK-taxable. Foreign rental, foreign dividends, foreign interest, foreign pensions, and any other foreign-source income flows are charged under ITTOIA 2005 and ITEPA 2003 at marginal income-tax rates. The personal allowance under ITA 2007 s.35 and dividend allowance under s.13A are available again (no longer forfeited by FIG claim).
  2. Foreign chargeable gains become UK-taxable. TCGA 1992 section 1 charges UK CGT on the worldwide chargeable gains of UK residents. Rates: 18% / 24% on residential property (post-30 October 2024); 18% / 24% on non-residential property post the same date. The CGT annual exempt amount under TCGA Schedule 1 paragraph 1 is available again.
  3. Worldwide-asset IHT scope kicks in later, not at year 5. The IHT long-term-resident test at IHTA 1984 s.6A requires 10 of the previous 20 tax years to be UK-resident. For a new arrival who is UK-resident from year 1 onwards, the s.6A threshold is first crossed at the start of year 10 (10 consecutive UK-resident years are within the 20-year window). Until then, the individual is non-LTR and only UK-situs property is within UK IHT scope under IHTA 1984 s.6.

The asymmetry between the FIG cliff (year 5) and the LTR cliff (year 10) creates a five-year planning window during which the individual is fully arising-basis on income and gains but still non-LTR for IHT purposes. Pre-cliff IHT planning (capital gifts of non-UK situs assets; offshore trust settlements) remains available through that window.

Pre-cliff lever 1: gifting non-UK situs assets while still non-LTR

IHTA 1984 section 6 provides that property situated outside the UK is excluded property if the person beneficially entitled is not a long-term UK resident. A non-LTR new arrival gifting non-UK situs assets to family or trust beneficiaries is making a transfer of excluded property; the gift is not a chargeable transfer for IHT purposes. There is no PET seven-year clock requirement on the non-UK-situs slice of the gift because the assets are simply not within the UK IHT framework while the donor is non-LTR.

UK situs assets in the gift bundle remain within UK IHT scope and are subject to the standard PET / CLT analysis. So the lever is targeted: it works for non-UK situs assets specifically; UK situs assets in the donor's estate need separate planning.

The CGT side of the gift is governed by TCGA 1992 s.17 (connected-person market-value disposal). A gift to a child (or spouse on certain terms; the standard s.58 spouse no-gain-no-loss rule applies between spouses) is treated as a disposal at market value, and any latent gain is potentially chargeable. Where the gift triggers a chargeable gain and the gain is foreign-source (the gifted asset is non-UK situs), the FIG claim for the year covers the gain; no UK CGT arises. The combined effect for a non-LTR donor in a FIG-eligible year is that the gift moves wealth out of the estate with no UK IHT and no UK CGT cost on the foreign-situs slice.

Pre-cliff lever 2: settling non-UK assets into trust while non-LTR settlor

IHTA 1984 section 48ZA(2) (inserted by FA 2025 section 45) provides that property settled into an offshore trust is excluded property at any time when the settlor is not a long-term UK resident. The wording is time-of-addition: property added to the trust while the settlor is non-LTR retains excluded-property status indefinitely, even if the settlor later becomes LTR. The protection is locked in for that addition.

A new arrival within the FIG window who is non-LTR can settle non-UK assets into an offshore family trust now, and the trust's excluded-property status for those assets persists across the year-5 cliff, the year-10 LTR threshold, and beyond. The arrangement is particularly valuable for family-investment-company succession planning, where the founder's non-UK assets can be parked in an offshore trust at the moment of UK arrival and remain outside UK IHT for the family's long-term planning.

Property added to the trust after the settlor becomes LTR does NOT receive excluded-property protection. That slice is in UK IHT scope as relevant property under the standard regime; the trust becomes mixed-status (excluded for pre-LTR additions; relevant property for LTR-era additions). The lever therefore has a sharp pre-LTR-threshold deadline: typically year 10 of UK residence, but earlier if the residence record has gaps that defer the s.6A threshold.

Pre-cliff lever 3: foreign income acceleration

Within the FIG window, foreign income is fully exempt from UK income tax if the FIG claim is made for the year (subject to the per-year breakeven on allowance forfeiture). The acceleration lever pulls foreign income into the FIG-window years where the individual has timing flexibility.

Examples. Foreign dividends from a closely-held offshore corporate vehicle can be declared in years 1 to 4 rather than year 5 onwards; the dividend timing is typically at the controlling shareholder's discretion. Foreign trust distributions (from an offshore family trust where the individual is a beneficiary with influence over distribution timing) can be accelerated into the window. Foreign chargeable gains can be realised by selling appreciated non-UK assets in years 1 to 4, with the gain FIG-exempt; the alternative is selling in year 5 onwards with the gain on arising basis at 18% to 24%.

The mirror move is to defer UK-source income or gains until year 5 onwards. The personal allowance, dividend allowance, and CGT annual exempt amount are forfeited by the FIG claim in years 1 to 4 anyway, so receiving additional UK-source income in those years carries no allowance benefit; the same income in year 5 carries the restored allowances. UK rental income is rarely controllable (the rent flow is determined by tenancy agreements) but discretionary UK-side cash flows (UK SIPP withdrawals, UK chargeable-event gains, UK closely-held company dividends) can sometimes be timed across the year-4 / year-5 boundary.

The interaction with UK-source income during the FIG window

FIG covers only foreign income and gains; UK-source income continues to be taxed on the arising basis throughout the four-year window. For a new arrival who is also drawing UK-source income (typical pattern for relocating professionals with UK employment contracts; for landlords with pre-existing UK BTL portfolios), the FIG claim has an explicit UK-side cost. The personal allowance, dividend allowance, and CGT AEA are forfeited for any year in which FIG is claimed; that forfeiture applies against UK-source income as well as foreign income. A higher-earner with substantial UK salary plus UK rental will see the same allowance forfeiture cost the same nominal amount whether or not foreign income is present, but the underlying UK-tax outcome is structurally higher because the £12,570 PA that would have applied is no longer available.

For new arrivals with mixed UK and foreign income, the per-year breakeven is more nuanced than the foreign-income-alone analysis. A landlord with £80k UK rental, £30k UK employment, and £45k foreign income would still claim FIG (the £45k at 40% foreign-income saving exceeds the £5,800 allowance forfeiture cost), but the per-year discipline still matters: in year 3 where the foreign income drops to £8k (rest realised in years 1, 2, and 4), the foreign-income saving may dip below the forfeiture cost despite the substantial UK-side flows.

The TRF distinction: not for new arrivals

The Temporary Repatriation Facility at FA 2025 section 41 plus Schedule 10 is sometimes conflated with FIG in advice work; the two regimes serve different populations and should not be merged in client analysis. TRF is for the pre-2025-26 remittance-basis cohort: individuals who were UK-resident and claimed the remittance basis under ITA 2007 section 809B before its FA 2025 s.40 abolition, and who have unremitted pre-2025-26 foreign income or gains still held offshore. TRF allows those legacy balances to be designated and brought onshore at favourable rates (12% in 2025-26, 12% in 2026-27, 15% in 2027-28).

A new arrival in 2025-26 or later who claims FIG has no pre-2025-26 UK tax history to clean up. Their foreign income from 2025-26 onwards is FIG-exempt during the window and arising-basis from year 5; there is no legacy unremitted-balance issue for TRF to address. Sessions advising should classify clients first: legacy non-dom with pre-2025-26 unremitted balances goes to TRF; new arrival goes to FIG. Only one of the two will be operative for any given client.

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Mid-window departure as a planning option

Departing the UK before year 5 ends the current FIG window early. The individual loses the remaining years of relief but takes no penalty (the window simply terminates at the point of departure). On the s.845B(1) test, a fresh FIG window is only available where the 10-year prior-non-residence test is satisfied again. So departure in year 3, with a target return to UK residence in (say) year 8, fails because the gap is only 5 years; the next eligible UK-arrival year would be year 13 of the original window (10 full non-UK tax years post-departure).

The departure-before-cliff route is therefore not a way to extend FIG access. It is only useful where the individual has other reasons to leave (work, family, personal) and wants to take the FIG benefit for the years they were genuinely UK-resident. For purely tax-driven departure-and-return, the 10-year reset cost makes the strategy uneconomic.

Worked pre-cliff timeline: a landlord-new-arrival

Take a hypothetical new arrival, Adetoun, who moves to the UK on 6 April 2026 with £1.6m of non-UK assets: Lagos commercial real estate worth £700k generating £45k annual rental; a Geneva investment portfolio worth £600k generating £28k annual income (dividends, interest); a Cayman family-trust beneficial interest worth £300k generating periodic distributions averaging £15k a year. Full FIG eligibility (12 prior non-UK tax years). Substantial UK-side earnings (£280k annual salary on UK contract, generating significant marginal-rate UK income tax exposure).

Year 1 (2026-27). Claim FIG. £88k foreign income (£28k Geneva + £15k Cayman distribution + £45k Lagos net rental) exempt from UK income tax. Consider gifting £200k of Geneva portfolio to adult children: outside UK IHT under s.6 (non-LTR donor); CGT on the £40k latent gain on the gifted £200k is FIG-exempt because the asset is non-UK situs and the gain arises in a FIG-claimed year.

Year 2 (2027-28). Claim FIG. £92k foreign income exempt. Settle £400k of remaining Geneva portfolio into an offshore family trust (s.48ZA(2) excluded-property protection locked in for that slice); the trust holds non-UK situs investments going forward, generating distributions to family beneficiaries.

Year 3 (2028-29). Claim FIG. £95k foreign income exempt. Accelerate any deferred foreign trust distributions from the Cayman beneficial interest into this year (where the trust deed allows distribution timing flexibility).

Year 4 (2029-30). Claim FIG. £88k foreign income exempt. Restructure Lagos commercial property holding into a non-UK corporate vehicle if not already, completing the pre-cliff arrangements; the Lagos rental flows continue through year 5 but become arising-basis at marginal rate from then.

Year 5 (2030-31). The cliff. Remaining foreign income on retained assets (Cayman trust distributions, residual Geneva interest income, Lagos rental net of expenses) is arising-basis taxed at 40% to 45% marginal. The £200k pre-cliff gift, the £400k trust settlement, and the foreign-income acceleration have moved approximately £600k of wealth and several hundred thousand of income flows out of year-5-onwards UK tax scope.

Year 10 (2035-36). The s.6A LTR threshold. From this year onwards Adetoun's worldwide assets are in UK IHT scope under IHTA 1984 s.6A. The pre-LTR-threshold gifts and trust settlement remain outside UK IHT (the gift was completed when Adetoun was non-LTR; the trust settlement was locked in under s.48ZA(2) at the non-LTR time of addition). The retained Lagos commercial property and any remaining Geneva investments become UK IHT-exposed; further pre-LTR planning on retained assets should have been completed in years 5 to 9.

The years 5 to 9 planning window

Between year 5 (FIG cliff) and year 10 (LTR cliff), a continuously-UK-resident new arrival sits in a residual planning window worth specific attention. The shape: foreign income and gains are fully arising-basis (year 5 hit); but worldwide-asset IHT scope is not yet engaged (year 10 has not arrived). So pre-LTR-threshold IHT planning (capital gifts of non-UK situs assets; offshore trust settlements) remains available even though FIG-side income planning has lost its main lever.

Three specific opportunities in the years 5 to 9 window. First, completing any non-UK-situs gifts that were not completed in years 1 to 4 (the IHT s.6 excluded-property rule still applies because the donor is still non-LTR). Second, settling further non-UK assets into offshore trusts under s.48ZA(2) (the same excluded-property protection for pre-LTR-status additions applies). Third, planning around the LTR clock itself: an individual who has had broken-year UK residence may be able to push the s.6A 10-of-20 threshold further out than year 10 (the 20-year rolling window can defer the threshold if the prior 20 years contain any non-UK years that have not yet rolled out of view).

Sessions advising should map the years 5 to 9 window explicitly. The CGT and income-tax position is at full arising-basis (with the personal allowance, dividend allowance, and CGT AEA available again, restored from the year-4 FIG-claim forfeiture). The IHT scope is still UK-situs-only. The asymmetry produces a different planning shape from the FIG-window years and a different shape from the post-LTR years 10+.

HMRC enquiry pattern on pre-cliff planning

HMRC's enquiry pattern in FIG cases focuses on three things: residence-history evidence (whether the s.845B(1)(c) 10-year prior-non-residence test is genuinely satisfied or has gaps); foreign-source characterisation (whether income claimed as foreign is genuinely foreign-source per ITTOIA 2005 s.845H and not UK-source mischaracterised); and connected-party gift / trust arrangements that may engage the IHTA 1984 s.74A anti-avoidance rule.

Pre-cliff planning that involves substantial gift or settlement steps should be documented robustly: the donor's non-LTR status at the date of each step (with the s.6A 10-of-20 calculation evidenced); the genuine non-UK-situs character of the assets (with situs-determination supported for offshore corporate shares, trust interests, and similar instruments); and the absence of any consideration-flowing-back arrangement that would engage s.74A through the s.48ZA(8) anti-avoidance trigger.

Standard tax-advice quality discipline applies. The pre-cliff levers are entirely legitimate where the underlying conditions are met. An adviser-led pre-cliff plan that is properly documented and that follows the statutory architecture (s.6, s.48ZA, FIG window mechanics) should hold up under HMRC enquiry; the risk is in poorly-documented arrangements or in claims where the underlying residence or situs conditions were never genuinely satisfied.

What this page does not cover

This page is the post-window FIG-cliff planning companion. It does not cover: the s.845B(1) eligibility test in detail (the FIG eligibility pillar covers); the per-year FIG claim mechanics and breakeven (the election-mechanics page covers); the TRF designation mechanics for legacy non-doms (the TRF cluster covers); the IHTA s.6A LTR test for IHT scope (the s.6A pillar covers); the s.48ZA offshore-trust mechanics in detail (the EPT companion page covers); the s.18 spouse exemption (the spouse-exemption page covers).

Statutory and HMRC sources cited above: ITTOIA 2005 section 845B; Finance Act 2025 section 37; Finance Act 2025 section 40; TCGA 1992 section 1; IHTA 1984 section 6; IHTA 1984 section 48ZA; Finance Act 2025 Schedule 10 (TRF).