Returning to the UK after a period of living overseas requires more than booking a flight. With the UK’s tax reforms now in effect from 6 April 2025, British citizens must understand how their foreign-held assets are treated under the new residence-based taxation regime. A strategic approach to structuring internationally portable assets can protect your wealth, minimise tax liabilities, and simplify reporting.

The Global Movement of British Citizens

According to the Office for National Statistics (ONS), around 5.5 million British citizens currently live abroad. In the year ending June 2024, 79,000 UK nationals emigrated, while 58,000 returned. This steady pattern highlights the need for tailored financial strategies to manage cross-border wealth before and after repatriation.

Why Asset Portability Matters

Many expatriates accumulate assets in their country of residence—such as local bank accounts, investment portfolios, or property. While these arrangements are practical abroad, they can pose challenges when returning to the UK:

• Forced closure of accounts: Local banks may require you to close accounts upon ceasing residency, potentially triggering capital gains tax (CGT) or loss realisation.
• Local reporting and exit taxes: Some jurisdictions tax gains at the point of exit.
• Complex currency conversions: Repayment or remittance may involve costly FX exposure.

To avoid these complications, holding assets in an internationally portable structure, such as a General Investment Account (GIA) in a tax-neutral jurisdiction like the Isle of Man or Jersey, can simplify the transition. These jurisdictions typically offer:

• No local CGT, dividend, or interest taxation
• Easy portability between jurisdictions
• Neutral reporting that keeps the assets outside UK tax scope until repatriated

UK Tax Reforms Effective 6 April 2025

The UK now operates a residence-based tax system, ending the remittance basis previously used by non-domiciled individuals.

1. Four-Year Foreign Income and Gains (FIG) Regime

Returning UK residents who were non-resident for at least 10 consecutive tax years may now claim relief on foreign income and gains for the first four tax years following their return.

• Income and gains from non-UK sources are exempt from UK tax
• This applies even if remitted to the UK
• To qualify, assets must not be held in UK-domiciled structures

2. Temporary Repatriation Facility (TRF)

This transitional measure allows former remittance basis users to bring in pre-April 2025 foreign income and gains at reduced tax rates.

• 12% tax in 2025–26 and 2026–27
• 15% tax in 2027–28
• Applies to foreign income/gains held outside the UK prior to 6 April 2025

Inheritance Tax Changes from April 2025

The UK is also shifting to a residence-based system for Inheritance Tax (IHT).

• IHT will apply to individuals who have been UK residents for 10 of the past 20 tax years
• Global estates will fall within UK IHT scope once the threshold is met
• Non-residents may still be liable on UK-sited assets

A public consultation on these changes is ongoing, but planning should start early for returning individuals likely to exceed the IHT residence threshold in the coming years.

Other Important Repatriation Considerations

Currency Risk: Repatriating assets from currencies like EUR or USD into GBP introduces FX exposure. This can be mitigated by using phased conversions, currency hedging, or retaining multi-currency accounts where possible.

Split-Year Treatment: If you return partway through a tax year, you may qualify for split-year treatment, limiting UK tax exposure to the post-arrival period only. The eligibility criteria are detailed in HMRC’s RDR3 guidance.

Temporary Non-Resident Rules: If you were UK tax resident for at least four of the seven years before leaving and return within five years, you may be taxed in the UK on capital gains realised during your time abroad. Careful timing is essential.

Structuring Your Assets Before Returning

To maximise the benefits of the FIG regime and TRF, it’s essential that:

• Your income and gains are generated outside the UK
• Your investments are held in non-UK domiciled platforms
• You avoid UK ISAs, onshore GIAs, or any HMRC-reportable wrappers before returning

Platforms in Isle of Man, Jersey, or Guernsey, offering General Investment Accounts, are well-suited for this purpose. These allow:

• Flexible fund selection
• Transparent and low-cost structures
• Deferred tax exposure until assets are moved into the UK

Conclusion

The UK’s 2025 tax reforms have transformed how returning British citizens should approach their finances. If you’re planning to repatriate, or have recently done so, the Four-Year FIG regime and the Temporary Repatriation Facility offer exceptional planning opportunities—but only if your assets are structured appropriately.

Using internationally portable investment solutions, ideally outside the UK tax net, gives you the control and flexibility to return home without triggering unnecessary tax charges.

To take full advantage, planning must be done before you reacquire UK tax residency. Speak to a qualified adviser with cross-border experience so your  assets are optimally positioned.

Sources: 

• Temporary Non-Residents and Capital Gains Tax (HS278)
• Statutory Residence Test (SRT): Temporary Non-Residence
• Guidance Note for Residence, Domicile and the Remittance Basis: RDR1
• KPMG Commentary on UK Spring Budget 2024
• HMRC Residence and FIG Regime Manual
• FIG Regime: Introduction
• Spring Budget 2024: Non-UK Domiciled Individuals Policy Summary
• ONS International Migration, June 2024