Leaving the UK: the complete tax guide
Leaving the UK? Get your tax position right.
Everything that decides your UK tax position when you move abroad — the Statutory Residence Test, what HMRC can still tax, and the traps that catch people years later.
Departures · United Kingdom
Live
Introduction
Organise your UK tax affairs before you go
If you are planning on moving overseas, or if you are already living abroad, there will be much on your mind. One area that you should consider is your UK tax position.
As an expat, you may wish to reduce exposure to UK taxation and at the same time, ensure you remain compliant with your UK tax obligations for the period that you are living overseas.
By seeking answers to the following three questions, you should be able to understand and organise your UK tax affairs while living overseas.
02
Do I need to pay UK tax while living overseas?
Whether you are a remote employee, business owner, or retiree living overseas, this guide helps you manage and optimise your tax position while remaining compliant with HMRC and UK tax law. It is written in general terms — obtain professional advice before acting on its contents.
Residency planning
Your resident status
Your resident status is the first and most crucial step in determining the extent to which HMRC can tax your incomes and gains.
Your domestic resident status is determined by the Statutory Residence Test. There are a series of tests to work through, split into three categories: the automatic overseas tests, the automatic resident tests, and the sufficient ties tests. Once your personal circumstances and travel pattern satisfy one of the tests, this will conclude your resident status for the tax year in question.
The UK also recognises the concept of split year, which enables individuals who leave the UK within a tax year to become non-resident upon departure, providing they meet the relevant criteria — such as starting full-time work overseas or ceasing to have a home in the UK.
It is strongly recommended that you keep a detailed record of your physical movements and personal circumstances as you go, to enable an accurate assessment of your resident status — and to back it up should HMRC request evidence.
Statutory Residence Test
Automatic resident
If you are present in the UK on more than 182 days, have a home in the UK, or work full-time in the UK.
Sufficient ties
If your UK ties and days of presence are above a certain threshold.
The plan when you leave
Manage your travel pattern and personal circumstances so that you become non-resident from the date you leave, so you exit the UK tax system and move from a worldwide taxation basis to a UK-sourced basis.
UK Tax System
Worldwide or UK sourced
Your resident status decides the basis you are taxed on. Switch between the two to see how it plays out.
Employment income
Tax follows where the work is physically exercised
If you are resident, you will pay tax on all your employment income, irrespective of where your work duties are physically performed.
If you are non-resident, you will pay tax on the portion of employment income that is generated from workdays physically exercised in the UK.
The key point
The source of employment income is the location that the work is physically exercised — not the location of the employer.
If you are non-resident and working overseas, you can ask HMRC to have your earnings paid gross of taxation. Otherwise you pay tax at source and reclaim it through a self-assessment tax return on an annual basis.
Pension Income
Treaties often hand pension rights to your new home
If you are resident, you pay UK tax on global pension income. If you are non-resident, you pay UK tax on UK pension income unless a double tax treaty provides an exemption — and you pay no UK tax on foreign pension income.
Worth checking early
Many treaties give sole taxing rights to your country of residence, so a treaty claim can have the pension paid gross. Government service pensions are usually the exception and stay taxable in the UK.
Rental income
Non-resident landlords can be paid gross
If you are resident, you pay UK tax on global property income wherever the property sits. If you are non-resident, UK property income stays within UK scope whatever else changes.
The 20% you should not be paying
Special rules require your tenant or letting agent to withhold basic rate tax from your rental profits. Applying to HMRC on an NRL1 form removes that requirement and has the rent paid to you gross.
Special tax regime
The disregarded income basis can reduce tax to nil
If you are resident, you pay UK tax on global investment income. If you are non-resident, only UK investment income is in scope.
The trade-off
Tax as a non-resident can be limited using the disregarded income basis, which restricts the charge to the tax withheld at source — often nil. The cost is your personal allowance, so it is worth calculating both ways.
Property gains
Report UK property disposals within 60 days
If you are resident, you pay UK tax on global property gains. If you are non-resident, gains on UK property remain within UK scope.
Relief you may be owed
If the property has been your main residence and was physically occupied at some point during ownership, private residence relief will reduce the taxable gain — and the final nine months always qualify.
Double tax agreements
Agreements that stop income being taxed twice
Double tax treaties are agreements between two countries designed to protect against the same income being taxable in both. Many tax systems follow the principle that income arising in a country is taxable there, whether or not you live there.
Three ways a treaty helps
It can credit the tax you have already suffered overseas, limit the rate one country may charge, or remove that country’s right to tax the income altogether.
Temporary non-resident
Leave for a short period and UK tax can follow you home
The temporary non-resident rule is anti-avoidance legislation designed to catch taxpayers who leave the UK temporarily to dispose of assets, or to receive incomes, to avoid a tax charge linked to their non-resident status.
If you are caught by the rules, the gains made or incomes received in the non-resident period will be subject to capital gains tax or income tax in the year that you return to the UK and resume UK residency.
Before you plan a short stay abroad
If you are planning to be overseas for a limited amount of time, it is vital that you consider the temporary non-resident rule to avoid unexpected tax charges when you return. The charge can be mitigated simply by remaining outside the UK for broadly five years.
02
UK departure
You become non-resident and receive these incomes, or sell these assets, while overseas.
UK tax rates
Income tax
Capital gains
Income tax
Taxable income
Rate
Income tax
£0 – £12,570
0%
Basic rate band
£12,570 – £50,270
20%
Higher rate band
£50,270 – £125,140
40%
Additional rate band
£125,140+
45%
Dividend allowance
£500
0%
Basic rate savings allowance
£1,000
0%
Higher rate savings allowance
£500
0%
UK compliance
Filing deadlines and what HMRC expects
The UK tax year runs from 6 April to 5 April. The tax return filing deadline is 31 October following the end of the tax year if you are filing on paper, or 31 January if you are filing electronically. The payment deadline is 31 January following the end of the tax year.
If you have not previously filed tax returns you must register for self-assessment with HMRC. HMRC will issue a ten-digit Unique Tax Reference number, which you will use to file your returns.
You may want to file even if you do not have to
If you are non-resident and in receipt of UK incomes, you will likely have an obligation to file. Even where you do not, it may be in your best interests — to claim a UK tax refund, or to claim the disregarded income basis and limit tax on investment incomes to the tax withheld at source.
Keep good records of your incomes, gains and travel pattern, to enable an accurate assessment of your UK tax position and to evidence it to HMRC should this be requested.
Key deadlines
31 October for paper returns and 31 January for electronic returns, with payment also due by 31 January following the end of the tax year.