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As the UK enters the 2025/26 tax year, a wave of important changes is hitting both residents and globally mobile individuals. From the new Foreign Income and Gains (FIG) regime to adjustments in Capital Gains Tax and the advance of Making Tax Digital, it’s more vital than ever to stay informed.

Here are the key updates that could impact your tax position this year and beyond:

1. The New Foreign Income and Gains (FIG) Regime

Effective from 6 April 2025, the FIG regime is a major shift in how overseas income and gains are treated. If you’ve been non-UK resident for at least 10 tax years before arriving in the UK, you may be eligible to elect for this regime. It offers the ability to keep overseas income and gains outside the scope of UK tax for four tax years.

But there’s a catch: you must still report the amounts to HMRC, even if they’re not taxed. That means detailed record-keeping is essential.

Key point: The clock starts ticking the day you become UK tax resident. Leave and come back? The clock doesn’t pause.

2. Temporary Repatriation Facility

For those who previously used the remittance basis, there’s a new opportunity. The Temporary Repatriation Facility allows remitted overseas income and gains to be brought into the UK at a reduced tax rate:

• 12% for the 2025/26 and 2026/27 tax years
• Rising to 15% in 2027/28

Anything brought in after that period? It’s taxed at the full rate.

Strategic tip: It could be worth paying the reduced rate now, even if you don’t need the funds immediately.

3. Capital Gains Tax and Business Asset Disposal Relief

The generous 10% rate for business asset disposal up to £1m is being phased out. Here’s how it’s changing:

• 2025/26: First £1m of gains taxed at 14%
• Future years: Rising to 18%, aligning more closely with basic CGT rates

This affects entrepreneurs and business owners considering selling up. Many are voting with their feet.

4. Inheritance Tax: From Domicile to Residency-Based

With the abolition of the non-dom regime, the UK is moving to a residence-based system for inheritance tax. If you’ve been UK tax resident for 10 of the last 20 years, your worldwide estate could be subject to UK inheritance tax.

To exit the UK IHT net, you’ll need to be non-resident for a full 10 years. That means serious, long-term planning is now required.

5. Fiscal Drag: The Sneaky Tax Increase

Tax brackets remain frozen until at least 2028/29. With inflation and rising salaries, more people are being pulled into higher tax bands.

Example: A reported 8 million people could be dragged into higher rate tax by the end of this freeze.

Governments call it fiscal policy. We call it the sneakiest tax hike going.

6. Employer National Insurance Increases

Employer NIC has risen from 13.8% to 15%, and it now kicks in at a much lower threshold (£5,000). While the employer’s allowance has increased to help smaller businesses, larger employers will feel the pinch.

7. Making Tax Digital for Income Tax (Coming in 2026, But Act Now)

From April 2026, MTD will apply to those with more than £50,000 in UK taxable rental or self-employed income. That means quarterly reporting using compliant software will be mandatory.

In future years, the threshold will drop to £30,000 and then £20,000.

Planning point: If this could affect you, now’s the time to prepare your systems and processes.

Get the Right Advice

These changes are some of the most significant shifts in UK tax for a generation. Whether you’re a UK resident, an expat, or someone with global income, understanding how these updates apply to you is essential.

Contact LSR Partners for tailored tax advice. We help you pay the right tax, in the right place, at the right time.