Moving Abroad? Understand Your UK Tax Obligations Before You Go

Starting a new chapter overseas can bring exciting opportunities, a different pace of life, and the chance to enjoy new experiences. But while your surroundings may change, certain UK tax obligations may still apply – especially if you retain financial ties or receive income from UK sources.

Whether you’re relocating for lifestyle, family, or work reasons, it’s important to understand how UK tax rules could continue to affect you, even if you’re no longer living here full-time.

In this blog, we outline the key tax considerations to bear in mind before making your move abroad.

Understanding Your UK Tax Residency Status

Your UK tax responsibilities are primarily determined by your residency status, which is assessed using the Statutory Residence Test (SRT). This test takes into account where you live, work, and how much time you spend in the UK each tax year.

In most cases, you’ll be considered non-resident for tax purposes if one of the following applies:

• You spend fewer than 16 days in the UK during the tax year (6 April to 5 April)
• You haven’t been a UK resident in the previous three tax years and spend fewer than 46 days in the UK
• You work full-time overseas (at least 35 hours per week), spend fewer than 91 days in the UK, and work no more than 30 of those days here

Other personal circumstances can influence the outcome. If you maintain a home in the UK, have family based in the country, or retain ongoing work or business ties, your position may change. These factors can result in you being treated as a  UK resident and subject to UK taxation.

What UK Income Is Still Taxable If You’re Non-Resident?

Even if you are classed as non-resident, certain UK-source income remains taxable in the UK. This typically includes:

• Income from UK employment or self-employment
• Rental income from UK property
• Interest from UK savings (in some cases)
• UK pensions (excluding the State Pension, which is usually tax-free for non-residents)

How Much UK Tax Will You Pay?

The standard income tax bands for the UK (excluding Scotland) for 2025–26 are:

You may still be eligible for the Personal Allowance (£12,570 tax-free) even while living abroad, if you’re a UK national or your country of residence has a Double Taxation Agreement (DTA) with the UK that includes provisions for this allowance.

What Is Double Taxation?

Double taxation occurs when both the UK and your new country of residence tax the same income. Fortunately, the UK has treaties with many countries that help mitigate this.

To benefit from a double tax treaty:

• Report the income on your Self Assessment return (use the Foreign section, SA106)
• Complete the relevant HMRC form (e.g. DT Individual for individuals)
• You may also need a UK tax residency certificate
• Submit these documents to the foreign tax authority to apply for tax relief or exemption

Note: These treaties don’t cover gains made from the sale of UK residential property, which remain taxable in the UK.

Capital Gains Tax and Inheritance Tax: What to Expect

Capital Gains Tax (CGT)

If you sell UK property or land while living abroad (including commercial or indirect holdings), you may still be liable for CGT.

• The annual CGT exemption is £3,000 for 2025/26
• You must report and pay CGT within 60 days of the sale

If you leave the UK and sell assets, then return within five years, you may still be liable for CGT on gains made while abroad, particularly on assets owned before you left. This rule is designed to prevent short-term tax avoidance.

Learn how to pay less CGT tax this year. 

Inheritance Tax (IHT)

If you’ve been UK tax resident for at least 10 out of the past 20 tax years, your worldwide estate may still fall under UK IHT rules.

• The standard IHT threshold is £325,000
• Any value above this is generally taxed at 40%

To help reduce your IHT liability, you could consider:

• Gifting assets during your lifetime (gifts made seven or more years before your death are usually exempt)
• Using trusts to manage how and when assets are taxed
• Taking out life insurance (a policy written in trust can help cover the tax bill)

Learn more in our helpful guide: Inheritance Tax and Property in the UK.

Ready to Move Abroad? Get Expert Tax and Residency Advice

While relocating abroad may mark the beginning of a new chapter, it’s important to remember that tax obligations don’t always end at the UK border. Understanding your position and planning ahead can help prevent unexpected tax liabilities later.

If you’re planning to live abroad, or someone close to you is preparing to move outside the UK and would like to discuss the tax implications in more detail, we’d be happy to arrange a time to speak. 

Learn more about our services for individuals living overseas, or get in touch with our team to book a consultation.

Terry Smith

Terry started life at HM Revenue and Customs before moving to Ashdens and then on to BDO and Chantrey Vellacott, the combination of which has provided Terry with a wide breadth of experience which has proved invaluable when helping a broad range of clients with their tax affairs.

Whether it involves meticulously organising a client’s tax affairs or leveraging his expertise to mitigate their tax exposure, Terry has a passion for delivering tangible results.