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Leaving the UK?Get your tax position right.
This guide helps British citizens and long-term UK residents understand how to manage their tax responsibilities when living or working abroad. It explains how to determine your UK tax residency status, handle income earned overseas, and stay compliant with HMRC requirements while maximising legitimate tax reliefs.
Last updated 2025
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.
Generally, it is best practice to organise your tax affairs in good time, to avoid any unnecessary complexities, in the present, future or when you return to the UK.
By seeking answers to the following three questions, this should enable you to understand and organise your UK tax affairs while living overseas:
- What is my resident status?
- Do I need to pay UK tax while living overseas?
- Do I need to file UK tax returns?
Whether you’re a remote employee, overseas landlord, or British expat with ongoing ties to the UK, this guide will help you manage and optimise your UK tax position and to ensure you remain compliant with UK tax law.
This booklet has been written in general terms and we recommend that you obtain professional advice before acting or refraining from action on any of the contents of this publication. Global Tax Consulting accepts no liability for any loss occasioned to any person acting or refraining from action as a result of any material in this publication.
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 (‘SRT’). There are a series of tests to work through, split into three categories, as follows:
- The automatic overseas tests
- The automatic resident tests
- 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 period to become non-resident upon departure providing that they meet relevant criteria, such as starting full time work overseas or ceasing to have a home in the UK.
If you are leaving the UK within a tax year period, the plan will be to manage your travel pattern and personal circumstances so that you become non-resident from the date you leave the UK so that you can exit the UK tax system and move from a worldwide taxation basis to a local sourced taxation basis, thus minimising exposure to UK taxation while overseas.
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. This will also enable you to back up the status, should HMRC request evidence.
If you are resident, you will pay tax on worldwide incomes and gains. If you are subject to dual taxation, international tax law will dictate the steps that you need to follow to mitigate double taxation.
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Mark has recently accepted a role in the UAE and will commute back and forth because his family will remain living in the UK.
Mark will spend 150 days in the UK and the remainder of the year in the UAE.
Mark does not meet any of the non-resident or split year tests and thus, will remain resident in the UK.
Mark has recently accepted a role in the UAE and will commute back and forth because his family will remain living in the UK.
If you are non-resident, you will pay tax on UK sourced incomes and UK property gains. You may opt to use a special tax regime available to non-residents which restricts tax on certain incomes to tax withheld at source - this is covered later in the guide.
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Hilary is recently retired and has decided to permanently relocate to Spain to live out her retirement. Hilary will rent out her home in the UK and already has a holiday home in Spain which she plans to make her main residence upon relocation.
Hilary will return to the UK for holiday purposes to visit her children for 7 days per tax year.
Hilary will meet the split year and non-resident tests and thus, will be non-resident upon leaving the UK. From this point onwards, Hilary will be subject to UK taxation on UK sourced incomes and UK property gains.
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.
To be clear, 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 submit a P85 form to HMRC to request that your earnings are paid gross of taxation. You can complete the form here. Otherwise, you can pay tax at source and reclaim tax back through a self-assessment tax return submission on an annual basis.
Arak is employed by a UK company and is paid in pounds into a British bank account.
Arak’s work pattern is split 90% overseas and 10% in the UK.
Arak is non-resident as he is in full time work abroad and therefore, Arak will pay UK tax on 10% of his employment income and 90% of his employment income will not be subject to UK tax.
If you are resident, you will pay tax on global pension incomes.
If you are non-resident, you will pay tax on UK pension incomes, unless there is an exemption in a double tax treaty. You will not pay UK tax on foreign pension incomes.
Many double tax treaties give the sole taxing rights to the country of residence, and therefore, if you are in receipt of a UK pension whilst living abroad, you may be able to exempt the UK from taxing your UK pension income by making a claim under a double tax treaty.
Further, you may be able to request that your pension income is paid gross of tax via completing a treaty relief form here.
Bill is a retired UK national and has a number of UK and US pension incomes.
Bill wholly lives in Albania, other than a one week trip to the UK to visit his family per tax year.
Bill is non-resident due to his minimal physical presence in the UK and thus, Bill will pay UK tax on UK pension income and Bill will not pay UK tax on US pension income.
If you are resident, you will pay tax on global property incomes, irrespective of where the property is situated.
If you are non-resident, you will pay tax on UK property incomes.
Special rules apply to non-resident landlords whereby the tenant or letting agent are required to withhold basic rate tax from your rental profits.
It is possible to avoid the withholding requirement by applying to HMRC via a NRL1 form to request that rental profits are paid gross to you.
You can complete the form here.
Sami is a UK national and he has a number of UK rental properties.
Sami lives in the US and visits the UK for 50 days per tax year.
Sami is non-resident due to his minimal physical presence and lack of ties to the UK.
Sami will be subject to UK taxation on UK rental profits. Sami has submitted an NRL1 form to HMRC which has been approved and therefore, Sami can receive rental profits gross of taxation.
If you are resident, you will be pay tax on global investment incomes, irrespective of where the investment is situated.
If you are non-resident, you will pay tax on UK investment incomes.
Taxation of investment incomes as a non-resident can be limited by using the disregarded income basis which limits tax levied on certain investment incomes to tax withheld at source, which often is nil.
Furthermore, it may be possible to restrict the tax rate the UK can levy on the investment income through international tax law.
Colin has a portfolio of UK shares that generate £100,000 of dividend income per annum. Colin has no other UK sourced income.
Colin wholly lives in Colombia and does not visit the UK.
Colin is non-resident due to his minimal presence in the UK and thus, the starting point is that Colin will pay UK tax on the dividend income.
However, Colin may use the disregarded income basis to limit UK tax levied on dividend income to tax withheld at source, which is nil and thus, the dividend income will be tax-free.
If you are resident, you will pay tax on global property gains, irrespective of where the property is situated.
If you are non-resident, you will pay tax on UK property gains.
If the property has been your main residence and has been physically occupied at some point during ownership, private residence relief will be available which will reduce the taxable gain.
If you sell the property as a non-resident, you will be required to complete an online property return irrespective of whether tax is payable. If you sell the property as a resident, you will be required to complete an online property return only if tax is payable. The return must be submitted within 60 days of the completion date.
Sarah recently sold her family home in the UK that she owned since 2000, generating a loss.
Sarah works full time in Bulgaria and visits the UK for 25 days per tax year.
Sarah is non-resident as she is in full time work abroad and albeit the disposal is at a loss and thus, no capital gains tax is payable, Sarah must report the disposal to HMRC within 60 days of the completion date through a capital gains tax return.
Double tax treaties are agreements between two countries which are designed to protect against the risk of double taxation where the same income is taxable in both countries.
Many tax systems around the world follow the principal of income arising in a country will be taxable in that country, irrespective of whether the individual is resident or not.
Double taxation could apply to a British expat, if for example, they move overseas, become non-resident and continue to receive UK income or they work overseas, remain resident in the UK and receive overseas income.
Double tax treaties provide relief by way of crediting tax suffered overseas, limiting the tax rate or completing removing the country’s right to tax the income.
Fred resides in France and receives two private pension incomes in respect of his previous employment in the UK.
Fred is non-resident in the UK and resident in France.
As a starting point, the UK can tax the pension income as the income is considered UK sourced. However, the UK/France double taxation agreement removes the UK's right to tax the pension income. Therefore, under a tax treaty claim, Fred will not pay UK tax on his UK pension income.
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 temporary non-resident 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.
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 to the UK. The tax charge can be mitigated simply by remaining outside the UK for broadly five years.
If you are present in the UK on no more than 15 days or are in full time work abroad.
If you become non-resident and receive these incomes or sell these assets while overseas.
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If you return to the UK and resume tax residence broadly within a five year period.
Suzie lived in the UK all her life up to 2019 when she relocated to Demark for work. Suzie became non-resident in the 2019/20 tax year however, Suzie returned to the UK and became resident in the 2022/23 tax year.
Suzie acquired a portfolio of US shares in 2012 and sold all of the US shares in 2021 when she was living in Denmark.
In real time the gains are not taxable in the UK due to her non-resident status, however, the gains will be taxable in the year of repatriation as she is considered temporary non-resident.
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 paper or 31 January following the end of the tax year if you are filing electronically. The payment deadline is 31 January following the end of the tax year.
You can check whether you have an obligation to file a UK tax return on an annual basis here.
If you have not previously filed tax returns, you must register for self-assessment through submitting an SA1 form to HMRC here. HMRC will issue a 10 digit Unique Tax Reference number ('UTR') which you will use to file your tax returns.
If you are non-resident and in receipt of UK incomes, you will likely have an obligation to file a tax return to report the income to HMRC. Moreover, you may not necessary have an obligation to file a UK tax return, but it may be in your best interests to file a tax return, to claim a UK tax refund or to claim the disregarded income basis to limit tax on investment incomes to tax withheld at source. It is recommended that you keep good records of your incomes, gains and travel pattern to enable an accurate assessment of your UK tax position and to provide evidence to HMRC to back up the position should this be requested.
The Worldwide Disclosure Facility (WDF) provides an opportunity for taxpayers who have undisclosed overseas income, to come forward to HMRC to get their tax affairs up to date on the best possible terms.
As countries are increasingly sharing data with one and other, it is becoming more likely that HMRC will eventually discover any undisclosed overseas income. It is best to come forward on an unprompted basis than be caught by HMRC on a prompted basis, as making an unprompted disclosure will lead to lower penalties.
Penalties range from 0% to 200% and depend on a number of factors such as the source country, the year the income arose and the behaviour of the taxpayer.
HMRC have advised that you should take the following steps if you wish to make a disclosure:
- Notify HMRC that you wish to make a disclosure here or respond to their letter that you have undisclosed rental income;
- Tell HMRC about all incomes you’ve not told them about before through the disclosure portal;
- Make a formal offer to HMRC to settle the outstanding tax, penalties and interest;
- Settle the outstanding bill upon submission of the disclosure;
- Help HMRC process the disclosure such as providing records and data to back up the formal offer.
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