The Foreign Income and Gains (FIG) regime can remove qualifying foreign income and gains from UK tax, but the correct decision is not simply “claim whenever you can”. Making a FIG claim also removes your Personal Allowance and CGT annual exempt amount for that tax year, while Foreign Tax Credit Relief may already eliminate some or all of the UK tax on an overseas source.
That is why this updated TaxTrends tool compares the tax outcome source by source. It models 2025/26 and 2026/27, applies treaty-aware foreign tax credit limits, and then tests whether a full claim, a selective claim or no FIG claim produces the lowest estimated UK tax. For the wider rules, read our FIG regime ultimate guide and HMRC’s HS266 FIG helpsheet.
At a glance
| Question | What the optimiser tests |
|---|---|
| Should I make any FIG claim? | The tax removed from qualifying foreign income/gains versus the cost of losing the Personal Allowance and CGT annual exempt amount. |
| Should I claim every foreign source? | No assumption is made. The tool tests source-by-source combinations and can leave an item taxable where treaty-limited FTCR already absorbs the UK tax. |
| What about foreign tax already paid? | Foreign tax is restricted to the applicable treaty maximum and then to the UK tax attributable to the same item. |
| Which years are modelled? | 2025/26 and 2026/27 for England, Wales and Northern Ireland. Scottish non-savings rates are deliberately excluded. |
FIG Election Optimiser: 2025/26 and 2026/27
Enter your UK income and gains, then add each foreign source separately. The optimiser will compare the strongest election patterns rather than forcing all foreign income into a single yes/no decision.
FIG Election Optimiser
Compare no claim, selective relief and broader FIG claims after allowing for treaty-limited Foreign Tax Credit Relief and the allowances you give up. The result is designed to show which election pattern deserves closer review.
1. Eligibility & UK position
Choose the tax year and enter UK income and gains before adding foreign sources. Scottish non-savings rates are deliberately excluded.
2. Foreign income sources
Enter each foreign source separately. Amounts should be gross before foreign tax. The optimiser can leave a source taxable where treaty-limited FTCR already gives a better result.
3. Foreign gains
Foreign tax on a gain depends on whether the source country is entitled to tax that particular gain under the treaty. Select the treaty position conservatively if the taxing right is not clear.
4. Run the optimiser
The model tests the relevant source-level FIG combinations, applies treaty-limited FTCR to unrelieved sources and ranks the estimated UK tax outcomes. Use the ranking as a planning screen rather than a filing computation.
The calculator will rank the strongest source-level election strategies and show the allowances and FTCR used. The detailed breakdown appears immediately below the recommended pattern.
The useful question is not whether FIG is available, but which sources are actually worth relieving after treaty credits and the allowances you surrender.
How the calculation works
What happens if I make any FIG claim?
For the tax year in which a foreign income claim, foreign gain claim or OWR election is made, the individual loses the personal allowance and CGT annual exempt amount, together with certain other allowances. This optimiser therefore sets those two core allowances to nil whenever any FIG relief is claimed.
Can I claim some foreign sources but not others?
Yes. A foreign income claim or foreign gain claim is the gateway, but the amount of relief is quantified source by source. The optimiser therefore tests individual foreign sources instead of forcing an all-or-nothing foreign-income election.
How is foreign tax credit relief calculated?
For each unrelieved foreign item, the model limits credit to the lowest of the foreign tax actually paid, the amount permitted by the relevant treaty cap, and the UK tax attributable to that item. Where several items remain taxable, it tests the serial order that maximises the total credit, following the HMRC HS263 method.
What does a 0% treaty cap mean?
It generally means the source country should not retain tax on that category for a qualifying UK resident. Tax withheld above the treaty rate is not automatically creditable in the UK and may instead need to be reclaimed from the source-country tax authority.
Why treaty-aware Foreign Tax Credit Relief changes the answer
HMRC’s basic credit-relief rule is that the UK credit is limited to the foreign tax that qualifies and the UK tax attributable to the same doubly taxed item. A treaty can reduce the creditable foreign tax further: tax suffered above the treaty-permitted rate is not automatically a UK credit and may instead have to be reclaimed from the source country. The calculation methodology is set out in HMRC HS263.
This matters because two superficially similar foreign receipts can produce very different UK outcomes. A source with a usable treaty credit may be cheaper to leave taxable, while another source with little or no usable credit may be an obvious candidate for FIG relief.
FIG claims can be selective
HMRC expressly states that you do not need to claim relief on all sources of foreign income and gains. The amount of relief is identified for each source, so a foreign income claim can cover one source while another remains taxable. The sting is that the allowance cost is triggered once you make a qualifying FIG claim for the year, even if the amount relieved is small.
That combination is the reason the optimiser tests individual sources. Once the allowance cost has been incurred, additional relief often helps, but treaty credits, foreign tax already suffered and the mix of UK income and gains can still produce edge cases where a selective claim is preferable.
2025/26 versus 2026/27
The core FIG mechanics are the same across the two years modelled, but dividend tax rates change in 2026/27. The calculator therefore keeps the years separate rather than applying one blended set of assumptions.
| Input | 2025/26 | 2026/27 |
|---|---|---|
| Personal Allowance | £12,570 | £12,570 |
| CGT annual exempt amount | £3,000 | £3,000 |
| Dividend basic / higher / additional | 8.75% / 33.75% / 39.35% | 10.75% / 35.75% / 39.35% |
| Standard CGT rates | 18% / 24% | 18% / 24% |
Pension interaction: keep this separate
There is one additional FIG planning issue that deserves its own calculation. Where qualifying foreign trade or partnership profits are also relevant UK earnings, claiming FIG relief on those profits can reduce the earnings-based ceiling for personal pension contribution relief. The specialist 2025/26 pension module below is retained for that purpose.
Common mistakes
Assuming FIG is automatically better because the foreign income is large
The claim can be expensive where the taxpayer is still benefiting from the Personal Allowance, CGT annual exempt amount or usable foreign tax credits. Compare the complete tax position, not just the tax on the foreign receipt.
Crediting every pound of foreign tax that was withheld
Foreign Tax Credit Relief can be restricted by the treaty rate and by the UK tax attributable to the same item. Excess source-country tax may need to be reclaimed abroad rather than credited in the UK.
Forgetting that a small FIG claim can cost both core allowances
A foreign income claim or foreign gain claim can remove the Personal Allowance and CGT annual exempt amount for the year even where only a relatively small amount is relieved. Measure that allowance cost against the incremental UK tax saved before deciding what to claim.
Ignoring foreign losses or specialist treaty facts
Foreign losses, overseas-property finance costs, dual residence, direct-investment dividends, US citizen cases, trusts and other specialist facts can materially change the result. Those cases should move from the web tool to a bespoke computation.
Use the result as a planning screen
The optimiser is designed to answer a practical first question: which FIG election pattern appears to minimise UK tax on the facts entered? If the result is material, the next step is to verify eligibility, the precise treaty article, the source-by-source figures and any losses or specialist provisions before the Self Assessment claim is filed.
You can also browse the rest of our Tax Tools & Calculators or contact the TaxTrends team if you want the calculation reviewed against your actual residence and foreign-income position. The tools are intended to narrow the questions that need professional review, not to replace that review.
