UK Law and Practice Contributed by: Roger Gherson, Alfred Gherson, Lisa Uttley and David Tipping, Gherson Solicitors
relevant business property with value more than that amount only receives 50% relief. There are a range of other miscellaneous reliefs avail - able in respect of IHT. 1.3 Income Tax Planning Since 6 April 2025, the UK has introduced a Foreign Income and Gains (“FIG”) regime, which exempts most overseas income and gains for new residents for four years. It is a condition of the FIG regime that the individual must not have been resident in the UK within the ten years preceding the start of their treatment claim. Transitional rules were introduced to address individuals who had become UK-resident shortly before the introduction of the FIG regime. Before 6 April 2025, the UK had operated a remit - tance basis of taxation for individuals who were resi - dent but not domiciled in the UK. A consequence of this regime was that many individuals had established relatively complex overseas structures designed to allow them to bring in money and property they had already acquired before becoming UK residents, while segregating any income or gains that would be sub - ject to tax if remitted to the UK. Alongside the FIG regime, the UK introduced a Temporary Repatriation Facility (“TRF”). In short, this enables an individual to designate amounts of unremitted income or gains and pay tax at a reduced rate on those amounts. The indi - vidual can then remit those amounts to the UK with - out paying additional tax. Any amounts designated in 2026/27 will be taxed at 12%, increasing to 15% in 2027/28. The TRF will not be available from the tax year 2028/29 onwards. Following the abolition of the remittance basis of tax, many non-domiciled individuals who had relied on it decided to emigrate. Notably, under the statutory residence test (see 7.1 Requirements for Domicile, Residency and Citizenship), an individual can spend a substantial number of days in the UK without becom - ing resident. The advantage of non-residence is that any overseas income (which had been relieved under the remittance basis) is not taxable in the UK. Careful planning of individual residence has become a popu - lar strategy for mitigating tax liability in the UK.
Alternatively, where it is not possible to break resi - dence in the UK, some individuals have moved over - seas and also become tax-resident in another country. This relocation aims to establish dual residency and claim the benefits of the UK’s network of double tax treaties with other countries. Under most double tax treaties, the UK follows the OECD Model’s definition of residence, including the residence tie-breakers used to determine the person’s residence if they are domestically resident in both countries. It is possible to control the outcome of those tie-breakers (eg, by maintaining a permanent home in only one country) and thereby ensure a desired tax treatment. If the indi - vidual is not resident in the UK for the purposes of the tax treaty, the UK’s right to tax is limited in accordance with the terms of the treaty. There are other opportunities in the UK to reduce an individual’s tax liability, including in relation to con - tributions to a pension scheme, individual savings accounts (ISAs) and certain types of venture capital investments. 1.4 Pre-Immigration and Exit Planning With the introduction of the FIG regime (see 1.3 Income Tax Planning ), most new arrivals will not be taxed on the majority of foreign income and gains for the first four years of tax residence. However, it is recommended that a review of the individual’s cir - cumstances takes place before they become resident. Any such review is likely to consider the strategies outlined in 1.3 Income Tax Planning . That being said, tax structuring should ideally be undertaken before the start of a new UK tax year (which runs from 6 April to 5 April) and, where possi - ble, should be considered (if not implemented) before the individual becomes UK resident. Key pre-immi - gration planning opportunities include restructuring overseas assets and income sources and ensuring that any gains are realised or income received prior to arrival in the UK. 1.5 Taxation of Real Estate Owned by Non- Residents and Non-Citizens Non-residents are liable for income tax on rental income generated from properties in the UK. Ordi -
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