Expat FAQs
Paul Theroux
"Travel is glamorous only in retrospect."
What income is taxable in the UK?
In it's simplest form, the UK tax law says that income tax is chargeable -
- on the worldwide income of anyone who is UK tax resident
- on the UK income of any non-resident
So it is essential to determine your tax residence status, remembering that each tax year is taken separately. You may be UK tax resident for one year because of an extended visit but non resident for the tax years either side.
There are separate rules for capital gains and for inheritance tax. If you have a liability to UK tax you must complete a Self Assessment tax return.
Will I be taxed in two countries?
It is possible to be tax resident in two countries at the same time. It is also possible to not be tax resident anywhere, although this is less common. When you are tax resident in two countries a measure of relief is usually available against double taxation.
Non-resident US citizens are usually required to file US tax returns and may be taxable in the US while living in the UK.
The UK has negotiated Double Taxation Treaties with a large number of countries and these are being updated all the time. Each treaty is different so if you believe you are taxed in the UK and elsewhere, contact us for more info and we can advise you of the relief available.
What is the UK tax year?
The tax year in the UK runs from April 6th to April 5th. The tax year ended April 5, 2025 is referred to in tax records as 2024/25.
Will I have any tax planning opportunities?
Internationally mobile expatriates probably have the greatest reason to plan their tax affairs carefully.
When your tax affairs straddle two countries, things can get rather complicated so it is important to plan your affairs in advance where possible.
Tax planning may involve the timing of your departure from or arrival in the UK, timing of sale of assets or the use of dual contracts for employment. Contact us for more info if you would like advice on the issues affecting you.
How is my spouse treated?
Since 1989 UK tax law treats husband and wife as separate individuals so each will have their situation assessed and will be taxed accordingly. The UK has no joint filing of tax returns for husband and wife.
Can I claim personal allowances against my UK income?
If you are UK tax resident, the tax personal allowance is given automatically but you cannot claim personal allowances if you elect for the remittance basis as a non-domicile. Otherwise, if you are not UK tax resident you can still claim UK personal allowances if you are -
• a citizen of a state within the European Economic Area (EEA), including British citizens
• a current or a former employee of the British Crown
• a UK missionary society employee
• a civil servant in a territory under the protection of the British Crown
• a resident of the Isle of Man or the Channel Islands
• a former resident of the UK who lives abroad for the sake of their own health or the health of a member of their family who lives with them
• a widow, widower or the surviving civil partner of an employee of the British Crown
• a national and/or resident of a country with which the UK has a Double Taxation Agreement which allows such a claim.
For taxable income over £100,000 tax personal allowances are reduced.
How will I be treated when I leave or return to the UK?
Each tax year is taken as a whole when determining your tax residence status. However, a year of arrival or departure can be split into periods of residence and non-residence in certain circumstances. There are more details here.
There are qualifying conditions which need to be met so before you leave or return to the UK it could be important to consider whether this split year treatment will be available to you.
Do I need to claim under a double tax treaty?
The UK has an extensive network of treaties with other countries. Treaties differ from country to country but the basic idea is to ensure that the same income is not taxed twice.
An example of this might be a resident of “Country A” who has UK rental income. She would most likely be taxable in Country A on worldwide income but also taxable in the UK on the rental income as it is a UK source income. The tax treaty between Country A and the UK would ensure the UK rental income isn’t taxed twice.
The treaty will eliminate double taxation either by exempting the income in one of the countries or, if the income remains taxable in both countries, by allowing a credit for the tax paid in the other country.
The requirement to claim treaty relief will depend on personal circumstances and in the UK the claim is made as part of the self assessment tax return. If you believe you need to make a claim, contact us for advice.
The list of current treaties with the UK is here.
Do I have to disclose offshore income?
If you are UK tax resident you normally need to disclose your worldwide income.
UK tax law says that if you are UK tax resident then you are taxable in the UK on your worldwide income and gains. However, you may not be taxable on your foreign income if you have elected to be taxed on the remittance basis.
You may be able to claim treaty relief if the income has already been taxed elsewhere.
If you are not UK tax resident then income arising outside the UK will generally be outside the scope of UK tax and does not need to be disclosed. But be careful if the foreign income is employment income and relates partly to UK duties as this is likely to remain taxable in the UK.
If I am not UK domiciled, can I claim the remittance basis?
If you are not UK domiciled you can consider a claim for the remittance basis of taxation. The claim has to be considered each year and where a claim is made, the individual loses tax personal allowances and the annual capital gains tax allowance for the tax year of claim.
The remittance basis allows you to exclude from UK tax any income arising outside the UK and which has not been brought (“remitted”) to the UK. An automatic claim for the remittance basis applies where the aggregate unremitted foreign income and gains for a tax year are less than £2,000.
Where an individual makes a claim for the remittance basis and has been resident in the UK for at least seven out of the nine previous tax years, they must pay a tax charge of at least £30,000 - the Remittance Basis Charge - for the remittance basis to apply.
From 6 April 2017 new deemed domicile rules came into force which changed the way some long-term UK residents are taxed. If the deemed domicile rules apply, a claim for the remittance basis is not available. Details of the deemed domicile rules are explaned in the HNRC manuals at the link below :
https://www.gov.uk/hmrc-internal-manuals/residence-domicile-and-remittance-basis/rdrm25000
What is a remittance?
If you are claiming the remittance basis of taxation as a non-domiciled individual you need to keep track if what income or gains have been remitted to the UK. If you do not remit income this year it may become taxable if you remit it to the UK in the future so a good record of the income and remittances is necessary.
The rules regarding what is treated as a remittance are complex. HM Revenue & Customs have published extensive guidance at the link below :
Non-Residents and tax records
Non-residents who visit the UK should keep careful records of the dates of their UK visits.
There have been recent tribunal cases considering residence and domicile issues which have been influenced by the quality of record keeping made by the individuals concerned. Particulary if considering claiming the remittance basis of taxation it is worth taking expert advice on how to structure your financial affairs.
As a non-resident, am I liable to capital gains tax?
From 2015 new rules were introduced for expats with capital gains arising from UK residential property. The rules were extended in 2019 to all UK land and property.
The rule is to ensure that non-residents are subject to CGT in a comparable way to UK residents.
The main provisions of the new rules include :
➣ CGT only applies to capital gains arising after April 2015. An election for re-basing from that date can be made and only the part of the gain arising after April 2015 will be taxed.
➣ The rate of CGT is either 18% or 28%, or a combination of the two, depending on the level of income liable to income tax. The annual exempt amount, currently £6,000 for 2023/24, is also available to non-residents.
➣ Principal private residence relief is available to non-residents only in limited circumstances for periods after April 2015.
➣ A new withholding tax is applied at the point of sale of the property. A non-resident vendor must disclose the gain and pay the CGT within 60 days of the sale. The disclosure must normally be made electronically using the HMRC online facility.
For short-term expats leaving the UK you may be liable to capital gains tax on the sale of any assets held at the time you left the UK if you sell while non-resident but return to the UK within five years. In this case the gains become chargeable in the year of return to the UK. This five year rule applies to all assets, not just land and property.
There is more information on CGT rules on our Capital Gains Tax page.
Need Help?
Do you need help with any of the issues discussed on this page?
If you need assistance with UK tax filing we can complete and file a return for you with all tax calculations taken care of.
We can agree a fixed fee in advance.
Contact us for details
Do exchange controls apply when I leave or return to the UK?
Exchange controls for persons leaving the UK were abolished in 1979 but any person carrying the equivalent of €10,000 or more in cash when they enter or leave the UK must declare it to customs officers at the border.
There are no capital or wealth taxes charged on arrival in the UK.
Tax residence status and immigration rules
Rules relating to the right to be in or remain in the UK are entirely separate from UK tax residence rules. There is informationon the UK immigration rules at the link below :
The March 2024 Budget announcement included proposals for new rules on the tax treatment of non-domiciled individuals. Details are at the foot of this page.
The 2024 Spring Budget introduced proposed reforms to the UK non-dom regime for income tax and capital gains tax with a consultation announced for inheritance tax.
The Chancellor announced that the current regime will end at 5 April 2025. Full details will be included in a future Finance Bill but for the moment, the proposed changes are set out below although Shadow Cancellor Rachel Reeves has said that under a Labour government the taper currently proposed would be withdrawn.
The Proposed Changes - The FIG Regime
From 6 April 2025, the concept of domicile and the complex remittance basis rules will no longer apply.
The new regime will be based around a residence-based test. The new rules are designed to allow individuals relocating to the UK to be taxed only on their UK source income and gains for the first four tax years with no UK tax charged on non-UK income and gains arising in those years. The foreign income can be brought to the UK and it will retain this exemption.
To be within this four-year foreign income and gains (FIG) regime, individuals must be within their first four tax years of residence and this period of residence must follow a period of 10 tax years consecutive non-UK residence.
Unlike other European countries with similar rules, there will be no charge for opting into the FIG regime.
After an individual has been resident in the UK for more than four years, they will no longer be eligible for the four-year FIG regime and will be taxable on their worldwide income and gains.
Individuals who have been UK resident for less than four years on 6 April 2025 (following a period of 10 tax years of non-UK residence) will be able to use the FIG regime for the remainder of those four years.
Existing Non-Domiciled Residents
For individuals who are currently in the UK and electing to use the remittance basis of taxation there will be transitional arrangements in place.
Where a switch is made from the remittance basis to the normal (arising) basis of taxation in the 2025/26 tax year, the tax charge will only be on 50% of their foreign income in that year. This does not apply to foreign chargeable gains.
Where there has previously been a claim for the remittance basis so that foreign income would become taxable when remitted to the UK, the remittance will attract a reduced tax rate of 12% for a period of two years beginning on 6 April 2025. This is referred to as the ‘temporary repatriation facility’.
For capital gains purposes, individuals who have claimed the remittance basis will, on a disposal of an asset which was held personally at 5 April 2019, be able to elect to rebase that asset to its value as at that date.
Overseas Workday Relief (OWR)
This relief is currently available to non-domiciled individuals who have employment income, who are UK tax resident and where the remittance basis is claimed. Relief is available for the first three years of residence for any earnings attributable to employment duties performed outside the UK and not remitted.
Under the new proposals, OWR will be reformed. Eligible employees will still to be able to claim OWR for the first three years of UK tax residence, but with no restriction on whether or not those earnings may be remitted to the UK. Further consultation on these proposals will take place.
Inheritance Tax
Changes to the scope of inheritance tax (IHT) are proposed to bring it in line with a residence-based test. Consultations will be made before these changes are introduced.
The consultation will cover transitional provisions, the length of the residence criteria and tail provision, any connecting factors other than residence, gifts with reservation, domicile elections, formerly domiciled residents and calculation of trust charges.
The current proposals include an intention to move to a residence-based regime for inheritance tax ('IHT').
Under current rules, UK domiciled individuals are subject to IHT on their worldwide assets but non-UK domiciled are only subject to IHT on UK assets
The new proposals suggest a move to a regime where an individual's assets would be subject to IHT on the basis of UK tax residence. A 'grace period' of 10 years for incoming residents is proposed as well as a 10 year 'tail' period for those becoming non-resident.