Since 6 April 2025 the UK taxes its residents on worldwide income and gains as they arise. The remittance basis that many Indian "non-doms" used is gone. The one exception is the 4-year foreign income and gains (FIG) regime: if you became UK resident after at least 10 years of living outside the UK, you can claim for up to four tax years to pay no UK tax on your Indian interest, rent and gains. The catch is that you give up your personal allowance for each year you claim. Indian income is still taxed in India as well, and the UK-India tax treaty decides who gets the first bite and how the credit works.
Below: who qualifies for the FIG regime and when it is worth claiming, how interest, rent and capital gains from India are taxed once it ends, the problem with Indian mutual funds under the UK offshore fund rules, and what to check when you move from the UK to India.
What changed in April 2025?
HMRC's helpsheet HS266 puts it in one line: "From 6 April 2025, the remittance basis of taxation has been abolished." Residence, not domicile, now decides how you are taxed. All UK residents are taxed "on the arising basis of assessment on their worldwide income and gains".
Before this, an Indian on a UK work visa could often claim the remittance basis and keep Indian FD interest or rent out of UK tax as long as the money stayed in India. That planning no longer works for income arising from 6 April 2025.
Who qualifies for the 4-year FIG regime?
GOV.UK sets two conditions. You must be UK resident under the statutory residence test, and you must be "still within your first 4 years as a UK tax resident following at least a 10-year period as a non-UK tax resident."
A few details matter for Indians who moved recently:
- The four years run from when your UK residence started. The regime is available "for a maximum period of 4 consecutive years beginning when your UK tax residency started". If you arrived in 2023-24, only 2025-26 and 2026-27 are left.
- Unused years don't roll over. A year spent non-resident inside the window is simply lost.
- You claim on your Self Assessment return, each year, source by source. You choose which foreign income and gains to relieve.
- Foreign employment income isn't covered. HS266 says relevant foreign earnings "are not qualifying foreign income". Overseas Workday Relief is a separate election for that.
- Relieved income can be brought to the UK freely. HS266's example says the taxpayer "is free to bring her relieved income to the UK at any time without any UK tax liability."
What you give up when you claim
HMRC's manual (RFIG43000) says a claimant loses, for that tax year, the personal allowance and "the CGT annual exempt amount". For 2026-27 the personal allowance is £12,570. So the claim only pays if the UK tax you would save on Indian income is more than the value of the allowance you lose.
Is a FIG claim worth it on Indian income? An illustrative example
Take a higher-rate taxpayer (40% band, which runs from £50,271 to £125,140 in 2026-27) with Indian NRO fixed deposit interest. I used the FBIL reference rate of ₹126.4081 per £1 on 16 October 2026, and ignored the personal savings allowance to keep it simple.
| Indian interest | In £ | UK tax at 40% | Less India credit at 15% | Extra UK tax without a claim | Cost of claiming (lost allowance at 40%) |
|---|---|---|---|---|---|
| ₹3,00,000 | about £2,370 | about £950 | about £360 | about £590 | about £5,030 |
| ₹15,00,000 | about £11,870 | about £4,750 | about £1,780 | about £2,970 | about £5,030 |
In both cases claiming costs more than it saves. The regime pays off when your foreign income or gains are large: for example a big gain on Indian property or shares sold in a FIG year. The personal allowance is lost in the year you claim, so the comparison has to be done year by year.
How is Indian income taxed for a UK resident?
Outside the FIG regime, GOV.UK's rule is simple: "If you are UK resident, you'll normally pay tax on your foreign income." That includes savings interest, dividends and rent from property abroad. India taxes the same income because it arises in India. The UK-India treaty (the 1993 convention, as amended by the 2013 protocol and the multilateral instrument) sorts out the overlap.
Interest from NRO deposits
Indian banks deduct 30% plus surcharge and cess on NRO interest paid to non-residents, under section 393(2) of the Income-tax Act, 2025 (old section 195). Article 12(2) of the treaty caps India's tax at 15% of the gross interest for a UK resident. NRE interest is a different case: it is exempt in India for a FEMA non-resident, but the UK still taxes it.
The UK gives Foreign Tax Credit Relief, but GOV.UK warns you may get less than the full foreign tax back if "a smaller amount is set by the country's double-taxation agreement". So if your Indian bank took 31.2% and the treaty allows 15%, the UK credits only 15%. You recover the difference from India by filing an Indian return and claiming the treaty rate. To claim treaty relief as a non-resident, section 159(8) of the Indian Act requires a certificate of residence from the UK, plus prescribed documents.
On ₹3,00,000 of interest, that means ₹93,600 deducted in India (30% plus 4% cess), ₹45,000 allowed by the treaty, and ₹48,600 to reclaim from India.
Rent from a flat in India
Article 6(1): "Income from immovable property may be taxed in the Contracting State in which such property is situated." India taxes it first. The UK taxes it as overseas property income, and you claim credit for the Indian tax on your Self Assessment return.
Capital gains on Indian shares, funds and property
The UK-India treaty's capital gains article (Article 14) leaves each country to tax gains under its own law. India taxes gains on Indian assets, with TDS for non-residents. The UK taxes the same gain if you are UK resident, and the Indian tax is credited against UK tax on that gain. A property sale is where this gets large. See the NRI property sale guide for the Indian side.
Why Indian mutual funds are awkward for UK residents
UK law treats a fund based outside the UK as an "offshore fund" if it meets certain conditions. HMRC's helpsheet HS265 explains the two outcomes:
- Reporting fund: "you will be subject to Capital Gains Tax on any gain you realise."
- Non-reporting fund: "any gain you realise will normally be treated as an 'offshore income gain'", and you pay "Income Tax, rather than Capital Gains Tax".
A fund only gets reporting status by applying to HMRC and keeping it up. HMRC publishes the list of reporting funds on GOV.UK. If your Indian mutual fund isn't on that list, assume the non-reporting treatment: gains taxed at your income tax rate, with no CGT annual exempt amount.
GOV.UK says you can "save tax-free" in an ISA, up to £20,000 in 2026-27. So the real comparison is a UK ISA, tax-free in the UK, against an Indian fund where gains may be taxed in India and then again as income in the UK, with only a credit for the Indian tax. That is a trade-off to weigh on your own numbers, not a recommendation either way. For the India-side rules on fund investing as an NRI, see mutual funds for NRIs.
Does India's deemed resident rule affect UK residents?
Usually not. India's deemed resident rule in section 6(7) applies only to a citizen who is "not liable to tax in any other country". A UK resident is taxed in the UK on worldwide income, so that condition normally fails. The 120-day visit rule can still apply if your Indian income is above ₹15 lakh. Both rules are explained in the UAE NRI tax guide, and you can test your own days with the residential status calculator.
Moving from the UK back to India: the residence test
The UK decides your residence each tax year (6 April to 5 April) under the statutory residence test. In outline, from GOV.UK:
- Automatically non-resident if you spent fewer than 16 days in the UK (46 days if you weren't UK resident in the 3 previous tax years), or you worked full-time abroad with fewer than 91 days in the UK, no more than 30 of them working.
- Automatically resident if you spent 183 days or more in the UK, or your only home was in the UK for 91 days or more in a row, or you worked full-time in the UK.
- Otherwise, the sufficient ties test counts your days against UK ties such as family, work and accommodation.
- Split-year treatment can divide the year you leave into a UK-resident part and a non-resident part.
Watch the temporary non-residence rule. HMRC's HS278 says if you had sole UK residence in at least 4 of the 7 tax years before you left and come back within five years, certain gains made while abroad are taxed in the year you return.
On the India side, most returning UK residents qualify as RNOR for a year or more, which keeps UK income outside Indian tax for that time. See the RNOR guide and the moving back checklist.
Checklist for UK-resident Indians
| Step | Where |
|---|---|
| Work out when your UK residence began and whether you had 10 years non-resident before it | FIG eligibility |
| Compare the UK tax saved on Indian income with the allowance you'd lose, each year | Self Assessment |
| Report Indian interest, rent and gains on the foreign pages of your return | Self Assessment |
| Claim Foreign Tax Credit Relief, limited to the treaty rate | Self Assessment |
| File an Indian return to reclaim TDS above the treaty rate, with a UK residence certificate | Indian ITR, see the NRI ITR guide |
| Check each Indian fund against HMRC's reporting fund list | GOV.UK |
| Before leaving the UK, check split-year treatment and the 5-year rule | Statutory residence test, HS278 |
Common mistakes
- Still thinking "it stays in India, so it's not taxed here". That was the remittance basis, and it ended on 5 April 2025.
- Claiming FIG relief on small Indian income. Losing a £12,570 allowance usually costs more than the tax saved on a few lakh of interest.
- Forgetting the claim is yearly. A claim for one year doesn't carry to the next.
- Taking UK credit for the full Indian TDS. The UK credits only what the treaty allows. The excess has to come back from India.
- Treating Indian fund gains as capital gains. Unless the fund has UK reporting status, the gain is normally an offshore income gain taxed as income.
- Ignoring NRE interest in the UK return. It is tax-free in India, not in the UK.
UK tax depends on your full position there: your residence history, other income, and whether you use Overseas Workday Relief. A UK tax adviser who deals with internationally mobile clients is the right person for the FIG and offshore fund questions, and an Indian CA for the Indian return.
