A UK/SA business sale in the FIG era: How joined-up advice can unlock major cross-border tax savings

Cross-border families often assume that moving to the UK shortly before a business sale will automatically create a UK tax problem. In the right case, the opposite can be true. Since the UK introduced its new foreign income and gains regime (the FIG regime) from 6 April 2025, some internationally mobile individuals can now realise very substantial foreign gains with no UK tax at all during a limited four-year window.

That does not mean every UK/SA case is straightforward. The South African side still needs careful analysis, particularly around residence, treaty status and any exit tax issues. But where UK and South African advisers work together early enough, the overall tax outcome can be dramatically improved.

The scenario

We recently advised a married couple with strong connections to both the UK and South Africa. They had lived outside the UK for many years, moved to the UK on a temporary basis in 2023, and were planning to return to South Africa after a few years. Most of the family’s business value remained in South Africa, although there was also a smaller UK company in the group. A sale of the business group was then proposed during the couple’s fourth year of UK tax residence.

That fact pattern raised an obvious concern: if the sellers were UK resident at the time of sale, would the UK tax the gain on the sale of the South African companies? Under the UK’s new rules, the answer may well be no – provided the conditions are satisfied and the planning is handled carefully.

Why the new UK rules matter

Before 6 April 2025, many internationally mobile individuals focused on the UK’s old “non-dom” rules. Those rules have now been replaced. The UK’s new regime is based much more directly on tax residence, and for qualifying new arrivals it can exempt most foreign income and foreign gains from UK tax during the first four years of UK residence.

Broadly, a person may qualify if they are within their first four years of UK tax residence after at least ten consecutive tax years of non-UK residence. A valid claim must then be made on the UK tax return. The relief is not automatic. 

For capital gains purposes, the relief can apply to gains on assets situated outside the UK, provided the asset does not derive at least 75% of its value from UK land. HMRC’s published guidance confirms that qualifying foreign asset gains can be relieved, and the legislation in Schedule D1 TCGA 1992 defines the relevant foreign gains and foreign assets.

In a UK/SA business sale, that can be hugely important. If the valuable companies being sold are South African companies, and the sellers fall within the FIG window, the gain on those foreign shares may be sheltered from UK capital gains tax altogether. By contrast, any gain on a UK company in the group remains within the UK tax net because that is not a foreign gain.

The planning opportunity in simple terms

In this kind of case, the UK opportunity is not about aggressive structuring. It is about identifying whether the facts already fit a statutory relief and then implementing the sale in a way that preserves that result.

At a high level, the key UK questions are:

1. Has the client genuinely been non-UK resident for the required 10-year period before coming to the UK? The FIG regime is only available if that residence condition is met.
2. Is the sale taking place during the client’s FIG window? In the example we reviewed, the sale was targeted for the couple’s fourth year of UK residence, which meant the timing could still fall within the available period.
3. Which assets are being sold? A gain on shares in South African companies may qualify as a foreign gain for UK purposes, but a gain on shares in a UK company will not.
4. Is any part of the consideration really payment for future work rather than payment for the shares? If sale proceeds are linked too closely to continued employment, performance or personal conduct conditions, there can be a risk that some amounts are taxed as income rather than capital. In the matter we reviewed, particular care was taken to separate share sale consideration from employment-linked rewards.
5. Have the UK compliance steps been lined up? Relief under the FIG regime must be claimed and quantified properly on the UK self-assessment return.

Why treaty analysis may still matter

In a genuine UK/SA case, domestic residence is not always the end of the story. A client can be resident under the internal law of both countries at the same time, in which case the UK/South Africa double tax treaty may determine where the person is treated as resident for treaty purposes.

That matters because the treaty can affect which country has primary taxing rights over a disposal and how double taxation is relieved. In the case we considered, the working assumption on the UK side was that the clients were treaty resident in the UK at the relevant time, and UK advice was then built around that position. The South African advisers were separately considering the implications of South African exit tax and the emigration process.

This is exactly why joined-up advice is so important. A UK-only answer is not enough and nor is an SA-only answer. The best result often depends on modelling the whole picture: UK residence, treaty residence, SA exit tax, timing of sale, timing of emigration formalities, and the legal drafting of the transaction itself.

What advisers can add most value on

For clients, the message is simple: if you have one foot in the UK and one in South Africa, do not leave the tax analysis until after heads of terms are signed. In the right case, advisers can add significant value by helping to:

• Confirm whether the client is still within the UK’s valuable four-year FIG window.
• Distinguish clearly between foreign and UK parts of a transaction.
• Review whether deferred or contingent consideration is genuinely capital in nature, or whether it risks being recharacterised as income.
• Coordinate UK and SA residence/treaty analysis before the sale completes.
• Ensure the right evidence, valuations and compliance steps are in place early enough.

The takeaway

For the right internationally mobile client, the UK’s post-2025 rules do not simply increase tax exposure. In some UK/SA cases, they can create a short but very valuable window in which foreign sale proceeds may be realised free of UK tax. If that UK position is then coordinated properly with South African advice on residence, exit tax and timing, the overall cross-border tax saving can be very substantial.

The critical point is that this is highly fact sensitive. Residence histories, treaty status, deal documents and the split between share value and service-linked payments all matter. Early, coordinated UK and South African advice can make all the difference.

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