The UK 4-Year FIG Regime: The Tax-Free Window Indians Moving to Britain Keep Wasting

An Indian software architect lands at Heathrow in September 2025 on a Skilled Worker visa, having lived in Bengaluru her whole working life. She owns a flat in Pune that earns Rs 6,00,000 a year in rent, holds Rs 40,00,000 in an Indian equity mutual fund sitting on a large unrealised gain, and assumes, as almost everyone does, that her Indian assets are an Indian tax matter she will sort out at leisure. She is sitting inside a four-year window in which she could realise that entire mutual fund gain and collect that rent with zero UK tax on it, and the window is already counting down. By the time she gets around to it, in year five or six, the same sale will be fully taxable in the UK at up to 24%. The cost of not knowing is measured in lakhs.

This is the single most valuable, and most ignored, piece of cross-border tax planning available to an Indian moving to Britain right now. The UK rebuilt its entire system for new arrivals from 6 April 2025, and the replacement is genuinely generous for the first four years and unforgiving after them. Most Indians arriving in the UK never claim it deliberately, never plan around it, and let the window expire on autopilot. This guide explains exactly what the regime is, who qualifies, the trade-off you accept when you claim it, and the deliberate moves that turn four tax years into a one-time chance to clean up your Indian portfolio tax-free.

The 30-second answer: The UK abolished the non-dom remittance basis on 6 April 2025 and replaced it with the 4-year Foreign Income and Gains (FIG) regime. If you become UK tax resident after at least 10 consecutive tax years of non-UK residence, you can claim 100% relief from UK tax on your foreign income and gains for your first four tax years of UK residence, whether or not you bring the money into the UK, and there is no charge to use it. The catch: in any year you claim, you lose your UK personal allowance (12,570 pounds) and CGT annual exempt amount (3,000 pounds). After the four years you are taxed on worldwide income and gains on the arising basis, with India-UK DTAA credit for Indian tax. For an Indian arriving in the UK, the move is to realise Indian capital gains and arrange Indian income inside the window, not after it.

What actually changed on 6 April 2025

For decades the UK ran the remittance basis for people who were resident but not domiciled in the UK, the so-called non-doms. The deal was simple in outline: you could keep your foreign income and gains outside the UK tax net for as long as you did not bring (remit) them into the UK, paying UK tax only on what you actually brought in, with an annual remittance basis charge of 30,000 or 60,000 pounds once you had been resident long enough. Indian professionals who arrived with offshore assets leaned on this for years.

That entire system was abolished from 6 April 2025. From that date, every UK resident is taxed on the arising basis by default, which means your worldwide income and gains are taxable in the UK as they arise, whether or not you bring the money into the UK. Domicile, the old centre of gravity of UK personal tax, stops mattering for income tax and capital gains tax. If you are UK resident, the starting position is now that the UK wants tax on your Indian rent, your Indian dividends, your Indian interest and your Indian capital gains in the year they accrue.

In place of the remittance basis the UK introduced the 4-year Foreign Income and Gains (FIG) regime for qualifying new residents. This is the part that matters to someone arriving from India, and it is built around residence history rather than the murky concept of domicile. The logic of the new system is cleaner than the old one: instead of an indefinite shelter that depended on never touching your money, you get a generous but strictly time-limited window in which foreign income and gains are simply not taxed in the UK at all, after which you join everyone else on the arising basis.

Who qualifies as a "qualifying new resident"

The eligibility test has two limbs, and for most Indians arriving in the UK both are met without difficulty.

First, you must become UK tax resident under the Statutory Residence Test. That is the UK's day-counting and ties test, and if you have moved to the UK to live and work you will almost certainly be resident.

Second, and this is the gate, you must have been non-UK resident for at least the 10 consecutive tax years immediately before the year you become resident. The relief is for people genuinely new to the UK tax system, or returning after a long absence, not for people cycling in and out. An Indian who has lived and worked in India (or anywhere outside the UK) for the decade before moving is comfortably inside this test. The UK tax year runs 6 April to 5 April, so "10 consecutive tax years" is counted on that calendar, not the Indian financial year.

If you clear both limbs, you can claim FIG relief for each of your first four tax years of UK residence, counted from the tax year you first become resident. A few mechanics decide how much window you actually have:

• The four years are counted from your first year of UK residence, not from when you discover the regime. If you arrived in 2022-23 or later and have been resident since, some of your four years may already be behind you. The regime started in April 2025 but it does not reset the clock; an arrival in 2022-23 has only the remainder of the four years left to use from 2025-26 onwards.
• A split year of arrival counts as one of the four years. If you arrive part-way through a tax year and qualify for split-year treatment, that part-year still consumes one of your four. This is why the timing of your physical move can quietly cost or save you a whole year of relief.
• There is no charge to claim FIG, unlike the old remittance basis charge. Using it is free in cash terms. The cost is the allowances you give up, covered below.

You claim it year by year on your Self Assessment return, nominating the income and gains you want relieved. It is not a one-time election that locks you in. That flexibility is the whole game, because it lets you claim in the years where you have large foreign income or gains and skip it in years where you do not.

The trade-off you accept when you claim

FIG relief is not unconditional. In any tax year you claim it, you lose two things:

• Your UK personal allowance, which is the 12,570 pounds of income you would otherwise earn tax-free each year.
• Your CGT annual exempt amount, which is 3,000 pounds of capital gains that would otherwise be tax-free each year.

You forfeit both for the whole year, and you forfeit them even if you only claim FIG relief on a single stream, say just foreign dividends. There is no partial version where you keep the personal allowance and shelter only your Indian rent. Claiming the regime in a year is an all-or-nothing switch for that year's allowances.

This is why the claim has to be weighed annually rather than treated as automatically good. In a year with substantial foreign income or gains, FIG is a clear win: sheltering, say, a Rs 30,00,000 Indian capital gain from UK tax is worth far more than a 12,570 pound personal allowance. In a year where your foreign income is small, perhaps a few hundred pounds of Indian interest, claiming FIG can leave you worse off, because you would surrender the personal allowance against your UK salary to shelter a trivial amount of Indian income. In that year you simply do not claim, you keep your allowances, and your small Indian income falls into the arising basis with DTAA credit for any Indian tax.

The honest framing: the regime rewards people who front-load their large foreign income and gains into the years where they are claiming anyway. If you are going to lose the personal allowance in 2026-27 to shelter an Indian mutual fund sale, you may as well also collect every other piece of Indian income you can pull into that same year, because the marginal cost of sheltering it is zero once you have already made the claim.

The planning window Indians keep missing

Here is the core of it, and the reason this guide exists. An Indian arriving in the UK is sitting on assets, Indian property, Indian mutual funds, Indian shares, fixed deposits, that have usually been accumulating for years and carry embedded gains and ongoing income. The four-year FIG window is a one-time chance to deal with those assets while the UK is not taxing them. After the window, every rupee of Indian income and every rupee of Indian gain becomes a UK tax event.

The deliberate moves that the window enables, none of which happen by accident:

Realise large Indian capital gains inside the window. If you hold an Indian mutual fund or a block of Indian shares with a big unrealised gain, selling within your four FIG years means the gain is relieved from UK tax entirely when you claim. Sell the same position in year five and the gain is fully UK-taxable. This applies even though you do not bring the proceeds to the UK; the relief covers the gain whether or not it is remitted. The practical sequence for someone planning to eventually rebuild a portfolio is to realise and reset inside the window, then hold the new positions into the arising-basis years with a stepped-up base cost.

Collect and arrange Indian income streams into claiming years. Indian rental income, Indian dividends, NRO interest and similar foreign income arising in a FIG-claim year is relieved. If you have flexibility over when certain income arises, for example a discretionary distribution or the timing of a deposit maturity, pulling it into a claiming year shelters it.

Mind the "arises on or after 6 April 2025" rule. Only foreign income that arises on or after 6 April 2025 is eligible for FIG relief. The regime does not retroactively clean up income from before that date. Pre-April-2025 unremitted foreign income and gains are dealt with by a separate, time-limited relief, the Temporary Repatriation Facility, which lets former remittance-basis users bring old offshore funds to the UK at a reduced rate. That is its own subject; if you arrived before April 2025 and used the old remittance basis, read the Temporary Repatriation Facility guide alongside this one, because the two reliefs solve different problems and the deadlines differ.

Do not confuse "not taxed in the UK" with "not taxed at all". FIG relieves the UK tax. India still taxes India-sourced income and gains under Indian law. An Indian mutual fund sale during your FIG window is free of UK tax but still attracts Indian capital gains tax. The win is that you avoid the UK layer on top, and during the window there is no UK layer to credit against, so the question of double tax does not even arise. That changes the day the window closes.

Worked example: realise the Indian gain inside the window, or pay for it after

Take the architect from the opening. Meera becomes UK tax resident in the 2025-26 tax year, having lived in India for the previous 15 years, so she clears the 10-year test and her four FIG years are 2025-26, 2026-27, 2027-28 and 2028-29. She has two pieces of Indian income and one large planned disposal:

• An Indian flat in Pune earning Rs 6,00,000 a year in rent (gross, before Indian deductions).
• An Indian equity mutual fund holding worth Rs 40,00,000, bought years ago for Rs 16,00,000, so an unrealised long-term gain of Rs 24,00,000. She plans to sell it to fund a UK house deposit.

Assume an exchange rate of Rs 105 to 1 pound throughout, for simplicity, and that she has a UK salary that already uses her basic-rate band, so any UK tax on these items would land at higher rates.

Scenario A: she sells the fund and reports the rent inside the window (2026-27, a FIG-claim year).

She claims FIG relief for 2026-27. On the UK side:

• The Rs 24,00,000 mutual fund gain, about 22,857 pounds, is relieved from UK CGT entirely. UK tax on it: 0 pounds.
• The Rs 6,00,000 of Indian rent, about 5,714 pounds, is relieved from UK income tax. UK tax on it: 0 pounds.

She does lose her UK personal allowance and her 3,000 pound CGT annual exempt amount for 2026-27, so a little extra UK tax falls on her UK salary that the personal allowance would otherwise have sheltered. The personal allowance is 12,570 pounds; at her higher rate of 40% that is worth about 5,028 pounds of UK tax. Set against sheltering a 22,857 pound gain plus 5,714 pounds of rent, the trade is overwhelmingly in her favour.

On the Indian side she still pays Indian tax: long-term gains on equity funds above Rs 1.25 lakh are taxed at 12.5% under Section 112A, so on a Rs 24,00,000 gain, roughly Rs 2,84,375 of Indian tax (12.5% of Rs 22,75,000). The rent is taxed in India under normal rules after the 30% standard deduction. But there is no UK tax layer at all, so nothing to credit and nothing to top up.

Scenario B: she waits and sells the same fund in 2030-31, after the window has closed.

By 2030-31 she is a normal UK resident on the arising basis. Assume the fund has grown modestly and the gain is still about Rs 24,00,000, around 22,857 pounds.

• UK CGT on the gain: after her 3,000 pound annual exempt amount, 19,857 pounds is taxable. At the UK higher CGT rate on non-property assets of 24%, that is about 4,766 pounds of UK tax.
• She gets a foreign tax credit for the Indian CGT paid on the same gain. The Indian tax was about Rs 2,84,375, around 2,708 pounds. The credit is the lower of the UK tax and the Indian tax on that income, so it cuts the UK bill but does not erase it: she still tops up roughly 4,766 minus 2,708, about 2,058 pounds, to the UK.
• The Indian rent, now arising-basis income each year, similarly attracts UK income tax with DTAA credit for Indian tax, so every future year of rent carries a UK top-up too.

The difference on the fund alone is about 2,058 pounds of UK tax, roughly Rs 2,16,000, paid purely because the disposal happened in year six instead of year two. Add the recurring UK tax on the rent for every post-window year, and the cost of letting the window lapse runs well into the lakhs over time. The arithmetic is not exotic. It is entirely a function of when she pressed the sell button relative to a four-year clock she did not know was running.

After the window: the arising basis and the India-UK DTAA

Once your four FIG years are gone, you are an ordinary UK resident taxed on the arising basis: worldwide income and gains, taxed in the UK as they arise, remitted or not. Your Indian rent, Indian dividends, NRO interest and Indian capital gains all become UK-taxable in the year they accrue. This is the default that the FIG window was holding off, and it does not creep up gradually; it switches on fully the first tax year after your fourth.

You are not taxed twice on the same income. The India-UK Double Taxation Avoidance Agreement and the UK's own foreign tax credit rules let you offset Indian tax already paid against the UK tax due on the same stream. The mechanism is broadly that the UK gives credit for the Indian tax, capped at the UK tax on that income, so you end up paying the higher of the two countries' tax, not the sum. Because UK income tax and CGT rates often sit above the corresponding Indian rates on the same income, the practical result is usually a UK top-up rather than a full wash.

This is why the window matters so much. Inside it, your Indian gains face only the Indian rate. Outside it, they face the higher of the Indian and UK rates. For the detail of how the treaty allocates taxing rights between the two countries and how the credit is computed, see the India-UK DTAA deep dive and the broader DTAA relief for NRIs guide. For the Indian-return mechanics of claiming foreign tax credit, the Form 67 guide covers the filing side from the Indian direction.

One reporting point that catches people: there is also a separate UK regime, the offshore income gains rules, that can re-characterise the gain on certain non-reporting offshore funds, including many Indian mutual funds, as income taxed at income tax rates rather than CGT rates once you are on the arising basis. That is a meaningful trap for an Indian fund investor in the UK and is covered in the UK offshore income gains guide for Indian funds. It is another reason to deal with Indian mutual fund holdings inside the FIG window, when the question does not even arise.

Edge cases

The general rule is clean, but the corners are where money is made and lost.

The 10-year residence test, counted precisely. The requirement is 10 consecutive tax years of non-UK residence immediately before the year you become resident. If you spent any of those 10 years as a UK resident, even one, you fail the test and cannot claim FIG. This bites returning Indians who did an earlier UK stint: someone who studied or worked in the UK eight years ago, left, and is now returning may not have a clean 10-year run of non-residence and could be locked out. Count the tax years on the 6 April to 5 April calendar, not loosely.

Losing the personal allowance in a low-foreign-income year. As covered above, claiming FIG forfeits the 12,570 pound personal allowance and 3,000 pound CGT annual exempt amount for that year. Do not claim FIG in a year where your foreign income and gains are small, because you would surrender allowances worth more than the relief. The right pattern is to claim only in the years where you have meaningful foreign income or a large gain to shelter, and to deliberately cluster your big Indian disposals into those years. Run the comparison each year before you tick the box.

Returning Britons and long-absent UK nationals. The FIG regime is not limited to foreign nationals. A British citizen who emigrated, spent at least 10 consecutive tax years non-resident, and now returns can also qualify as a qualifying new resident. This matters for Indian-origin families with British passports, or for an OCI-holder spouse who is a British national. Nationality is irrelevant; only the 10-year non-residence history and the four-year clock matter.

Split-year treatment and the year of arrival. If you arrive part-way through a UK tax year, you may get split-year treatment, so only the UK part of the year is taxed on the arising basis for non-FIG matters. But for the FIG count, that arrival year still counts as one of your four, even if it was only a partial year of residence. The lesson is that the calendar timing of your physical move interacts with the four-year clock: arriving in early April versus late March can shift which tax year is your "year one" and therefore how much usable window you get. If you have any flexibility over the exact date you trigger UK residence, model it before you book the flight.

The pre-April-2025 income carve-out. FIG relief only covers foreign income and gains arising on or after 6 April 2025. Income and gains that arose before that date, particularly unremitted amounts from an old remittance-basis period, are not covered by FIG. They are handled by the Temporary Repatriation Facility, a separate and also time-limited relief. If you straddle the changeover, you need both reliefs working together, and the planning is genuinely intricate.

The closing read

The UK gave Indians moving to Britain a four-year head start and almost nobody uses it on purpose. The regime is not subtle and it is not a loophole. It is the stated, legislated treatment for qualifying new residents, with no charge to claim, and it does exactly one valuable thing: it removes the UK tax layer from your foreign income and gains for your first four UK tax years. For an Indian arriving with an Indian flat, an Indian fund portfolio and Indian deposits, that is a one-time, expiring opportunity to realise embedded gains and reset your Indian holdings while the UK is not looking.

The honest read at the end is this. Treat your four FIG years as a project, not a default. In the first weeks after you arrive, list every Indian asset with an embedded gain and every recurring stream of Indian income. Decide, with the personal-allowance trade-off in front of you, which years you will claim and which large disposals you will deliberately pull into those years. Sell the appreciated Indian mutual fund inside the window, not after it. Pull discretionary Indian income into a claiming year. And mark the date your fourth year ends in your calendar, because the day after it, your Indian rent and your Indian gains become a UK top-up bill for the rest of your time in Britain. The people who plan this keep lakhs that the people who drift through it hand to HMRC. The rule is the same for both; the only variable is whether you saw the clock.

This is general information, not personal tax advice. The FIG regime, the Statutory Residence Test and split-year rules are technical and fact-specific, the India-UK DTAA interacts with each individual's circumstances, and the personal-allowance trade-off depends on your full UK income picture. Indian capital gains tax and the offshore income gains rules add further complexity for fund investors. Before acting on any of this, take advice from a UK-qualified adviser and a chartered accountant in India who can see both sides of your position, and confirm the current rates and thresholds, which change at each Budget.

Related guides

• India-UK DTAA deep dive
• Foreign tax credit and Form 67
• NRI residency and RNOR rules
• DTAA relief for NRIs
• Capital gains tax for NRIs on shares and mutual funds
• Tax-efficient investing for NRIs
• NRI portfolio asset allocation
• NRI retirement planning across two countries
• NRI mutual fund eligibility
• UK NRIs and Indian funds: the offshore income gains trap
• UK ISAs and pensions when you become non-resident
• The Temporary Repatriation Facility for pre-2025 foreign income
• UK temporary non-residence and the CGT clawback