FIG relief reaches 72.5% of offshore qualifying carried interest

From 6 April 2026, carried interest has its own route into Foreign Income and Gains reliefGOVGOV: 72.5% of the qualifying profits apportioned to the non-UK part of a deemed investment-management trade counts as qualifying foreign incomeGOV, while non-qualifying carried interest counts only to its foreign pre-arrival proportionGOV.

The starting point is the new deemed trade. An individual performing investment management services in a tax year, directly or indirectly in respect of an investment scheme under arrangements, is treated as carrying on a trade for that yearGOV, with the profits being the non-qualifying profits plus 72.5% of the qualifying profitsLegislation. Carried interest arising under the arrangements is divided into qualifying and non-qualifying carried interestGOV, with the detail of that split sitting in the carried interest guidance. The 2026 changes apply for 2026-27 onwardsLegislation, including for investment management services whenever performedLegislation.

The FIG regime then filters that trade income further. Qualifying carried interest is a label under the carried interest rules; it does not by itself make the income qualifying foreign incomeGOV. For FIG purposes the countable amount is 72.5% of the qualifying profits apportioned to the part of the deemed trade treated as carried on outside the United KingdomGOV. Location follows workdays: the trade is wholly in the United Kingdom if all applicable workdays are UK workdays, wholly outside if none are, and otherwise split by the UK-workday proportion, under section 23KLegislation.

Non-qualifying carried interest can also enter the FIG regime, but only through the foreign pre-arrival proportion of the non-qualifying profitsGOV. That proportion is the share of applicable workdays that fall within the individual's pre-arrival period and are not UK workdaysGOV. The pre-arrival period is the run of consecutive tax years of non-UK residence ending immediately before the individual became a qualifying new residentLegislation.

The general trade-profits bullet is carved back to match. Profits of a trade carried on wholly outside the United Kingdom remain qualifying foreign income, except for profits of a trade treated as carried on under section 23IGOV, and a separate bullet now points section 23I trade profits to the new Carried interest section instead.

The standard FIG gates still apply. Relief is only for qualifying new residentsGOV, only for income falling within a section 845H description that is not disqualified income under section 845IGOV, and only for income arising on or after 6 April 2025GOV, since a foreign income claim cannot reach back before 2025-26GOV. A former remittance-basis user returning after long non-residence cannot use the regime for pre-6 April 2025 accrualsGOV.

For advisers to internationally mobile investment managers becoming qualifying new residents, the practical point is to track UK against non-UK investment management workdays from arrival and to separate the pre-arrival non-UK workday record, since those two apportionments decide how much carried interest the FIG regime sheltersGOV.

The legal basis is sections 845H and 845I of the Income Tax (Trading and Other Income) Act 2005 with sections 23I to 23K of that Act on the carried interest deemed trade, inserted by the Finance Act 2026.