Leaving the UK? Follow the tax residence trail before you go

Leaving the UK is rarely just a question of booking flights, packing boxes and updating your address. From a UK tax perspective, the key question is whether you remain UK tax resident, become non-UK resident, or fall within split year treatment for the year of departure.

This matters because UK residents are generally within the scope of UK tax on worldwide income and gains, whereas non-UK residents are usually only taxed on certain UK-source income and UK assets. HMRC confirms that a person’s residence position is determined under the Statutory Residence Test, and each tax year is looked at separately. The test considers time spent in the UK, work patterns and continuing connections with the UK.

The starting point: The Statutory Residence Test

The Statutory Residence Test broadly works through three stages:

1. Automatic overseas tests: Can you be treated as non-UK resident?
2. Automatic UK tests: Are you automatically UK resident?
3. Sufficient ties test: If neither automatic test decides the answer, do your UK connections and day count make you UK resident?

For example, if you work full-time overseas for the tax year, you may be non-UK resident if you spend fewer than 91 days in the UK, work in the UK on fewer than 31 days and have no significant break from overseas work.

Can the year of departure be split?

Although residence is usually assessed for a whole UK tax year, split year treatment may apply where an individual leaves the UK part-way through a tax year. In that case, the year may be split into a UK part and an overseas part. HMRC confirms that, where there is an actual or deemed departure from the UK, the main departure cases to consider are Cases 1 to 3.

These broadly cover:

• Starting full-time work overseas.
• Accompanying a partner who starts full-time work overseas.
• Ceasing to have a UK home.

For example, where an individual leaves the UK to live abroad and ceases to have a UK home, split year treatment may be available if the detailed conditions are met, including being UK resident in the departure year, UK resident in the previous year and non-UK resident in the following tax year.

Leaving the UK part-way through the year does not automatically make you non-resident from the date you leave. The split year rules need to be reviewed carefully.

What if you still have UK income?

Becoming non-UK resident does not necessarily mean your UK tax obligations end.

HMRC confirms that non-residents generally do not pay UK tax on overseas income and gains, but they may still pay UK tax on UK income, such as rental income from UK property.

Common examples include:

• UK rental income.
• UK employment income relating to UK duties.
• UK pension income.
• UK directorship fees.
• Profits from a UK trade.
• Gains on UK property or land.

If you rent out UK property after leaving, the Non-Resident Landlord Scheme may apply. In broad terms, this can require tax to be deducted from UK rental income unless HMRC approves payment of rent gross.

If you sell UK property while non-resident, you may need to report the disposal to HMRC, even where there is no tax to pay or a loss arises. HMRC guidance confirms that non-residents must report disposals of UK property or land.

Watch the temporary non-residence rules

Some people leave the UK, sell assets while abroad, and then return a few years later assuming that any gains realised while overseas are outside the UK tax net. That can be a trap.

The temporary non-residence rules can bring certain gains, and in some cases certain income, back into UK tax when an individual returns to the UK after a relatively short period of non-residence. HMRC’s 2025/26 helpsheet explains that these rules can apply where an individual resumes UK residence after a period not exceeding five years, and had been solely UK resident for at least four of the seven tax years before departure.

This means that departure planning should not only ask:

“Am I non-resident now?”

It should also ask:

“How long do I expect to remain non-resident, and what might I do while I am away?”

Inheritance Tax should not be forgotten

As of 6 April 2025, the UK Inheritance Tax regime moved to a residence-based system. HMRC states that a person may be a long-term UK resident if they have been UK tax resident for either the previous 10 consecutive years or for 10 or more of the previous 20 tax years. Long-term UK residents may remain within the scope of UK IHT on non-UK assets for a period after leaving the UK.

This is particularly important for internationally mobile individuals, families with overseas assets, and those with trusts or succession planning structures.

Practical checklist before leaving the UK

Before leaving, individuals should consider:

• Expected UK departure date.
• Expected residence position for the current and following tax years.
• UK day count and workdays.
• Whether a UK home will be retained.
• Where their spouse, civil partner or children will live.
• Whether split year treatment may apply.
• Whether they will retain UK income or assets.
• Whether they intend to sell assets while overseas.
• Whether the temporary non-residence rules could apply.
• Whether UK IHT remains relevant.
• Tax residence and reporting obligations in the new country.

If a person has left or is leaving the UK and wants to claim a repayment of UK employment tax, they may be able to submit form P85, although this is not required where they are completing a Self-Assessment tax return for the year of departure.

How Gerald Edelman can help

Leaving the UK can create valuable planning opportunities, but it can also create unexpected UK tax consequences if the residence position is not managed carefully.

The key is to plan before departure, keep clear records of travel and workdays, and review UK tax exposure not only in the year of leaving, but also during the period overseas and on any future return to the UK.

Our International Tax specialists can help you understand your residence position, manage your UK tax obligations and plan your move with confidence, contact us today to discuss your circumstances.