HMRC clarifies when carried interest may qualify for FIG relief

Relief depends on residence and foreign allocation

The clarification matters to investment managers who are qualifying new residents. Under the FIG regime, an individual generally must become UK resident after at least ten consecutive tax years of non-UK residence and may claim relief during the first four years of UK residence. Relief is not automatic: only qualifying foreign income or gains can be relieved, and the individual must make a claim.^[1][2][5][6]

Qualifying and non-qualifying carried interest

From 6 April 2026, an individual performing investment-management services is treated as carrying on a trade in relation to carried interest. HMRC says the amount that may qualify as foreign income depends on both the character of the profits and where the deemed trade is treated as carried on. For qualifying profits, the potentially eligible amount is 72.5% of the portion apportioned to the trade carried on outside the UK. For non-qualifying profits, only the foreign pre-arrival proportion may qualify. HMRC directs users to the UK and non-UK workday rules in section 23K of the 2005 Act.^[2][3][4]

Records and claims

Finance Act 2026 section 58 and Schedule 11 inserted the carried-interest rules for 2026–27 onwards, including where investment-management services were performed earlier. Managers and fund businesses should identify affected individuals, distinguish qualifying from non-qualifying profits and retain workday and residence-period records supporting the foreign allocation. A FIG claim must be quantified on the individual's Self Assessment return. HMRC's new section gives no worked allocation example for complex or incomplete workday records, so the statutory rules and the individual's actual history remain necessary.^{[2][3][4][5][6]}