Managing UK investments when you live overseas

Determining your UK tax residency status

This is how HMRC decides if you're still one of theirs.

Before anything else, you need to know whether HMRC still considers you a UK tax resident. Almost every tax rule hinges on that. The official tool for the job is the Statutory Residence Test (SRT) – a joyless flowchart of day-counts, ties, and footnotes introduced in 2013.

Automatic non-residence

You're automatically not a UK resident for a given tax year if you meet any of the following:

• You were UK-resident in one (or more) of the past three years but spend fewer than 16 days in the UK this year.
• You weren't UK-resident in any of the last three years and spend fewer than 46 days in the UK.
• You work full-time abroad, visit the UK for under 91 days, and work in the UK for fewer than 31 days.

If you tick one of those boxes, congratulations, you're off the hook. For now.

Automatic residence

On the other hand, you're automatically a UK resident if you meet any of the following:

• You spend 183 days or more in the UK in the tax year.
• Your only or main home is in the UK and you live in it for at least 30 days (with various caveats).
• You work full-time in the UK.

Sufficient ties test

If you don't fall into either automatic category, the SRT moves to the 'sufficient ties' test. Here, HMRC looks at how sticky your relationship with the UK really is.

Ties include:

• Family. spouse or minor children in the UK.
• Accommodation. a place you can stay that's available 91+ days.
• Work. at least 40 days of UK work in the tax year.
• 90-day rule. You've spent 90+ days in the UK in either of the last two tax years.
• Country tie (for leavers only). The UK is the country where you spent the most time that year.

The more UK ties you have, the fewer days you can spend in the UK before triggering tax residency.

HMRC sets different thresholds depending on whether you're a 'Leaver' (someone who was UK-resident in any of the past three years) or an 'Arriver' (someone who wasn't).

Residency status kicks in once you hit a certain number of UK ties, and spend enough days in the UK to match the thresholds in HMRC's grid.

Here's how it breaks down:

Leavers (UK-resident in any of the past three tax years):

Days in UK	Residency triggered if you have...
16–45	4 or more UK ties
46–90	3 or more UK ties
91–120	2 or more UK ties
Over 120	1 or more UK ties

Arrivers (not UK-resident in any of the past three tax years):

Days in UK	Residency triggered if you have...
46–90	All 4 UK ties
91–120	3 or more UK ties
Over 120	2 or more UK ties

The logic is simple: the more ties you have, the fewer days you can spend in the UK before becoming tax resident.

It's a bit like telling everyone you're over your ex while still using their Netflix login, wearing their hoodie, and texting their mum on her birthday. HMRC, like everyone else, can tell you haven't really moved on.

Split year treatment

Even if you're classed as UK resident for a particular year, you may qualify to split the year, so only part of it is taxed as UK residency.

This applies when:

• You leave the UK to start full-time work abroad.
• You cease to have a UK home.
• You move to join a partner overseas.

If eligible, your tax year is split into a UK-resident period (before departure) and a non-resident period (after leaving). The reverse applies if you move back mid-year.

Each scenario has its own rules and order of priority, so it's worth checking the official HMRC guidance when relocating.

UK taxation of income for non-residents

Becoming non-resident is not a tax escape hatch, unfortunately. The good news is that the UK generally stops taxing your foreign income.

The less good news? It still taxes your UK-sourced income – rent, pensions, dividends, and the rest - even if your strongest personal link to Britain is a Boots Advantage Card that hasn't seen a till since the Coalition government.

Stick with us, because things are about to get a little complicated.

UK rental income and the non-resident landlord scheme

If you rent out UK property while living abroad, that income is still taxed under UK rules. Basic-rate tax (20%) is usually withheld at source through the Non-Resident Landlord Scheme (NRLS) - where your letting agent or tenant deducts tax from the rent and sends it straight to HMRC.

You can apply to receive your rent gross - no tax deducted upfront - if your tax affairs are in order. That means registering for Self Assessment and paying the tax yourself at the end of the year, after deducting allowable expenses (agent fees, repairs, and mortgage interest).

There are two typical setups:

• Option A: Letting agent or tenant withholds 20% via NRLS. You file a Self Assessment return to claim back any overpayment or top up if you owe more.
• Option B: You get approval to receive rent gross. You still file a tax return, but you control the cash flow.

Either way, if you have UK rental income, you must report it - even if it's entirely covered by your personal allowance. Skipping the paperwork because 'HMRC probably isn't interested' is like leaving a toddler unattended with a can of paint and assuming the walls will be fine.

UK bank interest

UK bank and building society interest is paid gross to all savers – resident or non-resident – meaning no tax is withheld at source. That's been the case since 2016.

In most cases, non-residents don't pay UK tax on their bank interest because of the "disregarded income" rules, which effectively cap the tax at zero, regardless of how much interest they earn.

Form R105 was once used to confirm non-resident status, but since 2016 most banks no longer need it – all interest is paid gross by default. That said, some banks may still ask for it as a formality.

UK dividends

Dividends paid by UK companies to non-residents aren't subject to UK withholding tax.

If you live abroad and receive dividends from UK shares (whether in listed companies or a private company you own), you generally won't owe any UK tax on them, provided you're non-resident for the full tax year.

Non-residents may be taxed on dividends from UK close companies where they're involved in the management of the business, but this doesn't apply to ordinary investment portfolios.

If your UK dividends are taxable for any reason, you may be able to use the personal allowance and dividend allowance to reduce your bill.

UK tax might not touch your dividends, but your new country probably will.

Many treat foreign dividends as fully taxable, and if the UK hasn't taxed them, there's no credit to offset. Think of it as watching HMRC politely excuse itself while your local tax office pulls on rubber gloves.

UK pension income

Most UK pensions are taxable in the UK, even if paid to you while living abroad. This includes private pensions, annuities, and the UK State Pension, though only private pensions and annuities deduct tax automatically. The State Pension is taxable but usually not taxed at source.

As a non-resident, you can still claim the UK personal allowance (currently £12,570) to reduce or eliminate UK tax on your pension income. But unless there's a tax treaty that says otherwise, your new country will also tax that income as part of your worldwide earnings.

This is exactly the kind of overlap double tax treaties aim to fix. Some treaties give taxing rights to your country of residence alone.

For example, the UK's treaty with the US means private pensions are only taxed where you live. In that case, you can file form DT-Individual with HMRC and get your UK pension paid gross, with no UK tax deducted.

Where no treaty applies, or if the treaty gives the UK taxing rights, you may be taxed in both countries, but you should be able to claim a foreign tax credit to avoid paying twice.

Timing matters too. Some countries – notably France and Spain – don't recognise the UK's 25% tax-free pension lump sum. If you take it after moving, they may tax it as ordinary income. Taking that lump sum before emigrating could save you a costly surprise.

Always check how your new country treats UK pension income. Otherwise, your tidy retirement pot might get dragged into a foreign tax system like a ham sandwich tossed into a monkey enclosure – picked apart, flung around, and screamed at in a language you don't understand.

UK business profits

If you're a partner or sole trader and the business is actually carried on in Britain – staff, premises, or services delivered on UK soil – HMRC will assess your share of the profits, even if you manage it from Mauritius.

Register for Self Assessment, use the personal allowance if you qualify, and pay UK tax on the UK-generated slice.

In short, run the operation entirely offshore and HMRC stands down. Plant even one boot in Birmingham and they suit up.

UK employment income

Paid a salary by a UK company? By default, PAYE is withheld. Three scenarios decide whether you can shake it off:

• Do all your work outside the UK? Ask the employer for an 'NT' tax code so no PAYE comes off. Any PAYE already taken comes back via form P85 or your tax return. Skip form DT-Individual – 'DT' stands for Double Taxation and that form is only for pensions, interest and royalties, never for salary.
• Any duties performed in the UK? Spend even one workday on UK soil and HMRC taxes that day's pay. That's the default rule under UK law. But if you're covered by a double-tax (DT) treaty and meet all its conditions – including spending fewer than 183 days in the UK across any rolling 12-month period – the treaty can override that result: that means no UK tax at all, even on UK workdays. However, break that 183-day treaty limit, and the shield disappears. You're still non-resident (as long as you don't trigger UK residence under the statutory test), but HMRC can now tax the pay for every UK workday in that 12-month span.
• Spend 183 days or more in the UK within a single tax year (6 April to 5 April)? Now you're automatically UK-resident, and your entire salary - wherever earned - is in HMRC's sights. You can still claim credit for foreign tax paid, but the UK wants its slice.

A laptop in Lisbon might spare you; a Tuesday in Tottenham guarantees an HMRC welcome party.

Capital gains tax (CGT) for non-residents

Going non-resident doesn't mean you can sell everything tax-free while cackling maniacally from a hammock in Bali. The UK still taxes some capital gains – namely, those tied to UK property. Everything else? Depends on what you're selling and where you're selling it from.

UK property sales

If you sell UK land or property while non-resident, you're still on the hook for UK CGT.

• CGT applies to residential property sold from April 2015 onwards, and commercial property or land from April 2019.
• The tax rate is 18 or 28% for residential property, depending on your income bracket, and 10% or 20% for commercial property and land.

But – and this is important – you're only taxed on the part of the gain that built up after those dates.

To work that out, you've got two options:

• Apportion the gain: Work out your total gain from when you bought the property to when you sold it, then split it based on how long you owned it before and after the cut-off date.
• Rebase the value: Pretend the property was worth its market value on the cut-off date, and just pay tax on the increase since then.

Obviously, you'll go with the option that means paying less tax, unless you enjoy landing on Mayfair with three hotels and calling it 'doing your bit'.

You must file a Non-Resident CGT return within 60 days of completion, even if:

• You made a loss.
• The gain is covered by your CGT allowance.
• You thought HMRC had lost your phone number.

The 60-day rule applies to all disposals of UK property by non-residents. Failing to report it on time can result in penalties, even if no tax is due.

You might still get Private Residence Relief – which reduces or wipes out your CGT – if the property was genuinely your main home while you owned it.

Even if you weren't living there when you sold it, you can sometimes still qualify, as long as you lived in it for a decent chunk of time before moving out. HMRC has rules about how long you can be away without losing relief. For example, if you were abroad for work or waiting to sell it.

If the property is owned through a company or trust instead of in your own name, there are slightly different rules, but the end result is the same: the UK taxes the gain. That might be through CGT or Corporation Tax, depending on the setup. Either way, HMRC's still getting its slice.

Sales of other UK assets

Shares, bonds, funds – as long as they're not tied up in UK property, non-residents can usually sell them without paying UK CGT.

This includes:

• Shares in listed UK companies.
• UK mutual funds.
• Gilts and corporate bonds.

The exception? If the company gets more than 75% of its value from UK property. HMRC considers it 'property-rich' and will tax the gain – no matter how cleverly it's been wrapped in corporate cellophane. This rule mainly targets private companies holding UK real estate.

(Note: This doesn't apply to UK REITs (Real Estate Investment Trusts), which are property investment funds listed on the stock market. They have their own tax rules, and gains may be exempt depending on your investor status.)

Sales of foreign assets

If you're non-resident and sell assets outside the UK, the UK doesn't tax those gains. End of story.

Sell a ski chalet in Chamonix, a crypto wallet in Singapore, or a suspiciously large emerald in Bogotá – none of it triggers UK CGT.

But don't uncork the tax-free champagne just yet. Your new country of residence may tax those gains – and the country where the asset is located might want a slice too. For example, France can tax you for selling a French property, even if you live elsewhere.

Temporary non-residence rule

As John Denver sang, country roads, take me home – and after a stint abroad, it's natural to feel the pull. But when you get back, the welcome party may include awkward questions from old friends ("What really happened with that tuk-tuk crash?") – and tougher ones from HMRC about any gains you pocketed while you were away.

If you're non-resident for fewer than five full tax years, and you sell assets that you already owned while you were UK resident, those gains can be dragged back into the UK tax net when you return.

To be caught by this rule, both of the following need to be true:

• You were UK resident for at least four out of the seven years before you left, and
• You return to the UK within five full tax years.

If that applies, any capital gains you made while abroad on pre-owned assets – like shares, crypto, or even fine art purchased during your 'midlife pivot' – will be taxed in the year you return. This is known, rather drily, as the temporary non-residence rule.

Think of it like this: if you sell up and return too quickly, HMRC jumps out of the wardrobe like a tax-scented velociraptor – claws sharpened, calendar marked, ready to reanimate that offshore gain on your next Self Assessment.

If you stay out for at least five full tax years, you're safe. Those gains stay out of reach – though your country of residence may have taxed them at the time (you can usually claim credit for that if you return).

Business assets

There's a niche rule for non-residents who still have one foot in the UK business world. If you personally carry on a trade in the UK – say, through a branch, agency, or other permanent setup – then gains on business assets linked to that UK operation can still be taxed, even if they're not land or buildings.

That includes things like equipment, vehicles, intellectual property, or goodwill – basically, any asset used by the UK part of your business to generate income. If you sell one of those at a gain while non-resident, HMRC can still charge CGT.

This won't apply to most people, but if you're running a UK business while living abroad, HMRC hasn't forgotten about you.

So, to sum up:

At a glance: what the UK still taxes if you're living abroad

Asset/income type	UK taxed?	Tax notes
UK rental income	✅	Taxed via the Non-Resident Landlord Scheme or Self Assessment
UK pension income	✅	State and private pensions are taxed in the UK unless a treaty says otherwise
UK bank interest	❌	Treated as "disregarded income" = no UK tax
UK dividends	❌	Not taxed by UK (but likely taxed by your new country)
UK business profits	✅	If the business continues running in the UK
Business assets	✅	If used in a UK trade, CGT applies on disposal
UK residential property	✅	CGT applies to gains since April 2015
UK commercial property	✅	CGT applies to gains since April 2019
UK shares and funds	❌	Exempt unless the company is ‘property-rich’ (75%+ value from UK property)
Foreign shares/assets	❌	Not taxed by the UK if you're non-resident

Reporting and payment

If you trigger UK CGT as a non-resident – either by selling UK property or returning to the UK within five years – you'll need to report and pay it properly.

• Selling UK property? You must file a Non-Resident CGT return within 60 days of completion. You also pay the tax within that same 60-day window.
• Caught by the temporary non-residence rule? In that case, you report the gain through Self Assessment after you've resumed UK residency. No special form, but you'll need to do the maths – HMRC's Helpsheet 278 provides guidance (and mild psychological trauma).

For UK property gains, you can also use HMRC's real-time CGT reporting service online – a rare moment of digital efficiency, if you're into that sort of thing.

Double taxation treaties

These treaties decide which country gets first dibs on taxing your money, and which one has to back off or give you a credit.

Each treaty is a negotiation, and no two are quite alike.

• UK property income, for instance, almost always stays taxable in the UK. Your new country should then give you credit for whatever you've paid to HMRC – so you're not taxed twice on the same rent.
• Pensions are messier. Some treaties (like the one with the US) give taxing rights entirely to your new country of residence. Others (like France) split the difference – with the UK taxing government pensions, and France taking private ones.
• Employment income usually gets taxed wherever the work is physically done – but there are carve-outs for short stints abroad, and the usual 183-day rules may still apply.
• Capital gains on UK property remain firmly in HMRC's grip. Gains on other assets often escape – unless you wander back within five years and trip the temporary non-residence rules.

If a treaty gives taxing rights to your new country, you must claim it. HMRC doesn't just take your word for it – you'll need to file form DT-individual (via your local tax office) to get pension or interest income paid gross. Without it, you're stuck waiting for a refund. Dividends and interest also sometimes qualify for reduced UK withholding under treaty terms – but again, only if you apply.

Move to a country without a treaty – Costa Rica, Paraguay, Angola, and a few other tax wildlands – and both tax offices may want a bite. You'll be relying on "unilateral relief," where your new country may (or may not) let you offset the UK tax already paid. It's not always clean, and definitely not always fair.

Even with a treaty, timing can trip you up.

Different tax years, different ways of defining income (earned vs paid), and mismatched rules mean you could end up paying tax in one country this year and the other next year – with no refund mechanism to square it. Treaties are good – but they're not magic.

Currency risk: the invisible tax on expats

Sterling has a flair for drama. It slid nearly 10% in the fortnight after the Brexit vote and hit an all-time low of about $1.04 during 2022's mini-Budget wobble.

When you're living abroad those swings bite hard: a £10,000 quarterly rental cheque that landed as €12,000 at a healthy rate can shrink to €10,500 without you lifting a finger.

That's a term at private school – or a talking Japanese toilet that keeps guessing your PIN.

What a falling pound does to a six-figure lifestyle

Suppose your family budget abroad runs to €10,000 a month.

Exchange rate	Sterling needed for that €10 k	Impact on your UK cash flow
£1 = €1.25	£8,000	Plenty of headroom
£1 = €1.10	£9,091	Extra £13,092 a year just to stand still
£1 = €1.05	£9,524	Time to trim the wine cellar

A two-or-three-point lurch in the rate can demand another £1,500 a month out of your portfolio – enough to ruin even a well-padded cash-flow model.

Taming the FX beast (without turning into a trader)

You don't need a Bloomberg terminal, a caffeine IV, and a wall full of red string and pound-to-euro graphs to keep the FX beast at bay.

Instead, you might want to consider:

• Fixing the big numbers. Forward contracts or FX options let you lock a rate the day you sign for the Tuscan villa, not the day you complete. On a €1m purchase a two-cent move either way means ±£17k.
• Matching assets to liabilities. If most of your future spending will be in euros, parking a slice of capital in euro-denominated bonds or funds can take the edge off a sudden sterling rumble. You won't beat every move, but you might sleep better.
• Keeping multi-currency flexibility. Borderless accounts let you sit in sterling when it's firm and switch when rates tilt your way – handy when dividends land in pounds but bills land in dollars.

Moving money: rules, myths, and price pitfalls

• The UK won't block your transfers. Non-residents can wire money in or out freely; the remittance-basis rules bite only if you're resident.
• Other countries might. For example, South Africa's annual limit and China's capital controls are real. Always check local regulations before shifting eye-watering sums.
• Fees and timing still matter. Shop around, and if you need six figures on completion day, don't wait until the week before to 'see where the rate is'.

UK inheritance tax for expats

Thinking of dodging the 40% inheritance tax (IHT) bill by moving abroad? You might need to think again.

Until April 2025, the key fact was your domicile – not where you lived, but where HMRC thought you truly 'belonged'. Most Brits abroad are still UK-domiciled unless they've taken serious, deliberate steps to change it and cut ties with Britain.

And no, turning lobster red on the regular and planting a beach brolly in the Costa del Sol doesn't prove you've "gone native".

On 6 April 2025, the rules shifted. Domicile got sidelined, and a new test based on UK tax residence has taken over.

The new test: 10 out of 20

Under the new rules, your worldwide estate becomes liable for UK IHT if:

• You've been UK tax resident for 10 of the last 20 tax years immediately before the chargeable event (death or lifetime transfer), and
• You haven't been non-resident for long enough for the 'tail' to lift – it lasts three years if you clocked 10‑13 UK-resident years, then lengthens by a year for each extra resident year up to a maximum 10-year tail.

Two quick case studies:

12 years resident → 3-year tail

Sarah was a UK-tax-resident for 12 of the previous 20 tax years and emigrated on 6 April 2025. She stays within UK-IHT scope on her worldwide assets for the three tax years 2025–26, 2026–27 and 2027–28.

20 years resident → 10-year tail (maximum)

Emma spent 20 consecutive years in the UK before moving to Portugal in April 2025. The maximum 10-year tail applies, meaning her worldwide estate remains liable to UK IHT until 5 April 2035.

Think of it as a two-step gate. HMRC asks whether you've clocked 10 UK-resident years in the rolling 20-year window. If you ever have, a fixed tail keeps your worldwide assets in the net up to 10 years after you leave.

You fall out of scope only when both tests are satisfied – the 10/20 count drops below 10 and the tail has fully expired.

Think of the 'tail' as tax Velcro: easy to pick up, surprisingly hard to shake off.

In short: once you've clocked ten UK-resident years, HMRC can shadow you for up to ten more – you escape worldwide-asset IHT only when both tests relax: your resident-year tally falls below ten and the tail has fully expired.

What's still in scope?

• UK assets always are. No matter where you live, UK property, shares, and bank accounts are within reach.
• Residential property held via overseas companies. These stopped being "excluded" in 2017. Wrapping it doesn't work.
• Foreign property can also be dragged in if you hold it through a UK company. So, speak to a pro before playing Jenga with holding structures.
• Domicile still matters for old trusts. Pre-6 April 2025 trusts aren't "set-and-forget" any more. From that date, the trust mirrors the settlor's long-term UK resident status: while you're not a long-term resident, UK assets stay excluded; hit the 10-out-of-20 test and the whole trust falls in the IHT net; lose long-term resident status later and those foreign assets drop out again – but an exit charge (up to six percent) is due. Non-UK assets that were already excluded on 30 October 2024 keep that status permanently.

Takeaways on IHT:

• Talk to a cross-border adviser before setting up trusts.
• Check how many UK-resident years you've clocked.

Keeping UK wrappers while abroad: ISAs and pensions

Brits abroad quickly learn two things: local cheddar is never quite right, and UK tax wrappers don't always travel well.

Can you still contribute? Do the perks still apply? Or has HMRC unwrapped your tax shelter like a child going at a Quality Street tin on Christmas Day – no mercy, just colourful foil everywhere?

ISAs: You can keep them, but don't top them up

If you already have an ISA, good news: you can keep it. The investments inside stay sheltered from UK tax, and they'll carry on growing – or shrinking – tax-free.

You can also transfer an ISA to another provider even while non-resident in the UK.

But you can't add new money once you're non-resident (unless you work for the Crown or are married to someone who does). In the year you leave, you might still get your full ISA allowance if you were UK-resident for part of it – but after that, it's hands off.

You're meant to tell your ISA provider you've moved abroad so they can flag the account.

One catch: your new country might not give a toss about your precious ISA. The US treats it like a plain old taxable account. Australia too. Within the EU it varies, but expect your dividends or gains to show up on your local tax return.

Wondering if you can still keep your General Investment Account when you move abroad, and what your options are for using a SIPP internationally? Read all about it here.

Pensions: Still open, but with limits

You can keep contributing to UK pensions – just not very much. If you have no UK earnings, you're capped at £2,880 a year (which the government tops up to £3,600 with basic-rate tax relief).

However, that is only for the first five full tax years after you leave. When that window closes, you need fresh UK earnings to get any tax relief.

Still earning from the UK? Say you're a director on payroll or you freelance for UK clients – then you can contribute more, up to 100% of those earnings (and within the annual allowance).

Existing workplace or personal pensions can stay where they are. If you've left the job, you become a 'deferred member'. The fund stays tax sheltered and will eventually pay out – whether that's taxed by the UK or your new country depends on the treaty.

If you're in a defined benefit (final salary) scheme, double-check they'll pay to your new country. Most do. Some only pay in GBP. Either way, give them your new address.

You can also transfer your pension to a recognised overseas pension scheme, known as QROPS. Read more about them, and how they compare to a private pension (SIPP).

How State Pension works when you move abroad

The UK State pension is paid worldwide. But unless your new country has a reciprocal deal with the UK, it won't increase each year. That means your £11k-a-year pension might still be £11k...in 20 years.

Countries like those belonging to the European Economic Area (EEA), Switzerland, US (and randomly Jamaica for reasons known only to treaty negotiators)? You'll get uprated. Countries like Australia, Canada, or New Zealand? Frozen.

Providers can be weird about overseas clients

You're allowed to keep ISAs and pensions – but your provider might not want you to.

Vanguard will let you keep what's there, but provides users with 'restricted access'. Some brokers simply shut the account once you give them a foreign address; Freetrade, for instance, tells leavers they must transfer out or wind up the ISA entirely. And some don't care at all.

You might need to move accounts to a more expat-friendly platform. Interactive Investor, for instance, welcomes non-UK addresses.

Pensions are easier. Most SIPPs are happy with you logging in from Spain, Singapore or São Paulo. Just make sure your contact info is up to date and you respond to their ID checks.

Bottom line

Living abroad doesn't mean you've escaped HMRC's reach – it just changes the rules of the game. The UK will still tax many things that stay tied to Britain, like property, pensions and business profits, while most other income and gains slip off its radar. Your new country may well want a bite too, and treaties decide who gets the first forkful.

Add in currency swings, frozen pensions in some places, and providers that panic when you give them a foreign address, and it's clear that managing money overseas isn't a set-and-forget job.

Get the right advice, keep your paperwork straight, and don't assume that planting a deckchair in Spain or a laptop in Lisbon automatically cuts the cord. HMRC has a long memory, a longer tail, and – like a cat that's spotted the rustle of a treat bag – it turns up just when you think it's lost interest.

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