UK Tax Residence and the FIG Regime: How the Rules Decide Where You Stand

Why residence is the first question

Almost everything in UK tax hangs on residence. Resident: the UK taxes worldwide income and gains, subject to reliefs. Non-resident: broadly only UK-source income, and only some gains. Before any question about ISAs, pensions, property or a business can be answered, the residence question has to be settled — and for anyone with a US connection, settled in a way that lines up with their US filing position.

The Statutory Residence Test: how it is built

Since 2013 the UK has decided residence through the Statutory Residence Test (SRT) — a fixed sequence of rules applied to each tax year (6 April to 5 April). It runs in three stages, and the first stage to give an answer wins:

1. Automatic overseas tests. If one applies — built around very low UK day counts, or full-time work abroad meeting strict conditions — you are non-resident for the year, full stop.
2. Automatic UK tests. Otherwise, if one of these applies — spending 183 days or more in the UK, having your only home in the UK for a sufficient period, or working full-time in the UK — you are resident.
3. The sufficient ties test. If neither set decides it, residence depends on how many ties you have to the UK — family here, available accommodation, substantive UK work, significant UK presence in recent years — measured against your days in the UK. The more ties you have, the fewer days it takes to become resident; and the thresholds are tighter for people who were UK resident in a recent year than for genuine newcomers.

The precise day counts and definitions live in HMRC's RDR3 guidance, and they reward careful reading: what counts as a "day", a "home" or a "tie" is defined, not intuitive. Midnights matter, and travel days, transit and exceptional circumstances all have specific rules. Two people with identical diaries can get different answers because their histories and ties differ.

Split-year treatment

Residence is normally an all-or-nothing label for a whole tax year — inconvenient for anyone who arrives in October or leaves in February. Split-year treatment addresses this: in defined cases (starting full-time work abroad, ceasing to have a home in the UK, arriving to make the UK your only home, and others) the tax year divides into a non-resident part and a resident part, and worldwide UK taxation applies only to the resident part.

It is not elective and not automatic — the year splits only if your facts fit one of the specific cases, and the date the year splits follows from the rules rather than from your moving date. For US citizens the split rarely aligns with the US dual-status or full-year position, which is one of the classic sources of mismatched credits in a move year.

The FIG regime: four years, from 6 April 2025

From 6 April 2025 the UK abolished the remittance basis — the old regime under which non-domiciled residents could keep foreign income out of UK tax by keeping it offshore — and replaced it with a residence-based regime for foreign income and gains (FIG).

The shape of the new regime:

• It is available to people who become UK resident after a sufficiently long period (ten years) of non-UK residence.
• For up to the first four tax years of residence, a claimant can receive relief from UK tax on qualifying foreign income and gains — and, unlike the remittance basis, can bring the money to the UK without triggering UK tax on it.
• Claiming has costs, including the loss of certain UK allowances for the year of claim, so it is a genuine election rather than free money.
• Transitional rules apply to people who were within the old remittance regime, and the same reform moved inheritance tax onto a long-term residence basis.

Getting it right, and keeping evidence

The SRT is mechanical, which cuts both ways: there is usually a definite answer, but it turns on facts you must be able to prove — day counts, workdays, where your homes were and when. People near a boundary should keep travel records contemporaneously, not reconstruct them at filing time.

Residence, split-year and FIG decisions then feed straight into Self Assessment and the US return for the same period. We work through the test on your actual facts, coordinate the claims across both countries, and document the position so it survives scrutiny.