In her Budget statement delivered on 30 October 2024, the Chancellor, Rachel Reeves, announced a series of reforms to replace the tax regime for UK resident, non-UK domiciled individuals (non-doms) with a new foreign income and gains (FIG) regime.
This new regime came into effect from 6 April 2025.
If you are planning to move to the UK from Australia, or you have recently arrived, it’s important to be aware of the changes and their implications.
This is also the case if you have lived outside of the UK for an extended period and are considering returning at some point in the future.
The new FIG regime provides both opportunities and challenges, so understanding it and how it works will be important when it comes to your long-term financial planning. Read on to find out more.
The new regime provides a tax-efficient 4-year window for you to make the most of
Under the new system, you will be taxed on your worldwide foreign income and gains.
This means that while you are living in the UK, you will need to include any income or gains that you earn in Australia in your UK tax return, even if you don’t remit that money into the UK.
However, the key point to be aware of is that during the first four tax years you are resident in the UK, you won’t pay UK taxes on your FIG. This applies if you’ve been living outside the UK for more than 10 years.
So you will benefit from a four-year window during which you will enjoy 100% relief on all your FIG, such as income from property, investments, or businesses in Australia.
This will provide you with valuable financial flexibility as you settle into life in the UK. It could also be advantageous if you are only planning to live in the UK for a limited period, such as if you are on a short-term work contract.
You will only become subject to UK tax on any income derived from Australia after four years.
One important point to be aware of is that you will forgo your UK Personal Allowance (which is £12,570 in 2025/26) before which your income is tax-free. This means that all your UK earnings will be liable for Income Tax from when you arrive in the country.
There’s a highly advantageous retirement planning opportunity if you are eligible to access your super fund
The window of four tax years will be highly advantageous to you if you are moving financial assets to the UK from Australia.
It also raises the issue of what to do with your super fund, which will primarily depend on your future plans.
If you intend to return to Australia at some stage, then you can leave your super invested where it is, and use it to provide you with retirement income when you return.
But if your long-term plan is to retire in the UK, you will need to consider how you can draw money from your super fund to help fund your retirement. Naturally, you will want to do so as tax-efficiently as possible.
Previously, if you were a UK tax resident, Australian super income would have been fully taxable in the UK except in certain circumstances.
However, under the new FIG regime, you now have a four-year window of opportunity to get your Australian super fund into the UK in a highly tax-efficient manner.
The three key points to remember are that you must:
- Be eligible to access your super fund – you need to be over age 60 and fully retired, or over 65
- Fully intend to retire in the UK
- Move your super fund within four years of arriving in the UK.
This process is not necessarily straightforward, and it’s possible to make mistakes that could result in you being subject to an unwelcome tax charge.
The changes highlight the importance of advance planning
It’s obvious that the new FIG regime creates great tax opportunities, both in terms of your income and your super fund.
However, the complexities mean that detailed planning is essential to ensure that you take advantage of the potential tax benefits and avoid any expensive mistakes.
For example:
- If you can be flexible in terms of your arrival into the UK, it will be beneficial to do this as close to the start of a new UK tax year as possible.
- It will be important to clearly distinguish between your UK and Australian assets to ensure you are not taxed twice on the same income.
- The new FIG regime is complicated, and you will need to be fully aware of your personal circumstances in order to benefit fully.
Because of the complexity, we would strongly recommend that you get expert support from a financial planner who understands the different regimes in both the UK and Australia.
Get in touch
At bdhSterling, we are uniquely positioned to support your financial journey. We are authorised to provide financial advice in both the UK and Australia and can help you develop a clear plan if you’re intending to move to the UK and retire there.
Get in touch to find out more.
Please note
The value of your investment can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.
This article is for information only, it does not take into account your personal objectives, financial situation, or needs. Please do not solely rely on anything you have read in this article and ensure that you conduct your own research to ensure any actions you may take are suitable for your circumstances.
All contents are based on our understanding of HMRC, which is subject to change.