Why the UK is a safe tax haven for expatriates

With ongoing conflict in the Middle East, many expatriates are considering a temporary or permanent move to the UK. For those with overseas assets and structures and who moved to the Middle East to enjoy a tax-free lifestyle, understanding the UK tax landscape prior to any return is crucial.

1. The FIG regime

Due to changes introduced in April 2025, eligible arrivers to the UK can qualify for a very generous four-year exemption from UK tax on all non-UK income and gains.

The regime is not automatic and does need to be claimed, but for those who qualify, the UK’s tax regime will be similar to that enjoyed in the Middle East. Individuals who are returning to the UK will need to carefully check their eligibility for this regime.

2. Managing risks after the FIG regime expires and for those who do not qualify

Once the four-year FIG regime ends, the UK tax position changes significantly:

• Individuals will be taxed in the UK on their worldwide income and gains.
• Overseas assets held personally or via trusts and companies may become subject to UK tax.

For those individuals still here after the four-year FIG regime ends, all is not lost. With some careful planning and the right type of investments, it may be possible to limit the application of UK tax, especially for individuals who intend to only remain UK-resident temporarily.

Individuals who can benefit from non-UK structures may also be able to continue to do so with little or no tax where the structures were not set up for UK tax avoidance purposes.

3. Impact on non-UK structures: beware the UK tax trap

For those individuals holding key roles in offshore structures such as trusts and companies, it is vital to take advice before returning to the UK.

The four-year FIG regime does not apply to income and gains taxable at structure level, so individuals who hold key roles in those structures (e.g. trustees and directors) need to ensure they do not unwittingly bring these structures within the UK tax net on their return.

4. Timing your return and UK reporting: ensuring a smooth transition

Unsuspecting individuals could find themselves subject to UK tax for income and gains which arose prior to their return and on which they thought no tax would apply due to living in the Middle East. Planning a return and managing how and when UK tax and reporting will apply will be crucial.

With careful planning, it will often be possible to ensure even those who do not qualify for the FIG regime can live temporarily in the UK on a relatively low-tax basis.

Returners who have recently been UK-resident, though, will need to be especially careful to ensure their return does not trigger UK tax on income and gains earned since their departure.

Takeaways

Returning to the UK due to safety concerns is a difficult decision, but it’s important to understand the UK tax implications. The UK’s new FIG regime offers a very generous four-year window of relief for eligible individuals. After this period, significant care needs to be taken to avoid falling within the UK’s comparatively expensive tax regime. Specialist legal tax advice can help navigate the complexities for those contemplating any move to the UK.

If you are coming to the UK and need support or advice on tax issues, please contact Tax partner Alex Boothman.