If you’re considering coming to the UK - be it for work, lifestyle, or tax reasons then you'll probably wonder what such a move could mean for your overseas income and investments.
Here’s the reality, recent government reforms have completely changed how foreign income and any capital gains are taxed. If you’re not up to speed, then you run the risk of facing some serious tax surprises.
Whether you're planning your move, or already here and unsure what the new rules mean for you, this guide has been written to provide you with the critical things you need to know about:
Be sure to read on to find out more specifically about:
Your 'residency' basically refers to the country in which you're expected to pay tax. Most of the time this is based on where you live or work. However, the UK takes this a step further through the statutory residence test.
If you’re a UK tax resident, the general principle is that you’re usually taxed on everything you earn worldwide. It doesn't matter where that money comes from. If you're non-resident however, then you're only taxed on your UK-based income (like a UK salary, or rent from a UK based property for example).
The statutory residence test asks various questions that look at some of the key things as to your residence status. Whilst quite complex, try to follow the table logic and questions below to get an indication as to your likely residence status.
| 1. Automatic overseas tests | 2. Automatic UK tests | 3. UK ties and number of UK days |
| If you answer 'yes' to any of the below questions then you're likely a non-UK tax resident. If you answer 'no' to all of them then you need to do the Automatic UK test. |
Answering 'yes' to any of the below questions means you could be a UK tax resident. Answering 'no' means you should move on to the UK ties test. | Answers of 'no' to the below mean you're more likely to be an 'arriver' whereas answers of 'yes' mean you could be a 'leaver'. |
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Were you a UK tax resident in all 3 previous UK tax years? Have you spent < 46 days in the UK in the relevant UK tax year? |
Have you spent 183 days or more in the UK this tax year? Significant as if you reach that number and your likely to be a resident. |
Were you resident in the UK in any of the 3 previous UK tax years? Have you spent more days in the UK than any other country? |
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Have you spent < 16 days in the UK in the relevant UK tax year? If UK tax resident in 1 or more of the last 3 tax years. |
Is your only home(s) in the UK? Have you visited that home for 30 days or more in the relevant UK tax year? |
Do you have a spouse, civil partner, cohabiting partner, or minor child living in the UK? Are they a UK resident? |
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Do you work abroad and spend < 91 days in the UK? Do you work in the UK for > 3 hours on < 31 days in the relevant tax year? |
Do you work in the UK full time? Are < 75% of your working days in the UK? |
Do you have accommodation available to you? Is that for continuous period of at least 91 days in the year and you spend at least 1 night in the accommodation? |
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Do you work in the UK on 40 or more days in the UK tax year? Is that for > 3 hours per day? |
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Have you spent > 90 days in the UK in either of the previous 2 UK tax years? This number needs to ignore departure days. |
Whether you’re new to the UK, or looking to work in the country in the future, these tests apply. Check out our blog post in the link above the table for more information on this.
In short the answer is yes, but it can get very complicated.
This is referred to as dual tax residency. It all depends on the countries involved as they could in effect be competing for your tax income. In some cases countries have something called a double taxation agreement which in effect is a saving grace.
If the UK has a tax treaty with your home country (such as the USA, Canada, and Australia to name a few), then that agreement usually decides:
Where there's no treaty things can soon get challenging. You’ll really need advice, and promptly!
Domicile refers to the country that you're permanently based in, the place you regard as your permanent home and that's even if you live elsewhere!
If your long term home is in Canada, but you're currently working in London for a few years and you plan to go back, then this means you're likely to be considered non-domiciled (non-dom) in the UK!
Historically, being non-dom came with a major tax advantage, you could choose to use the remittance basis of taxation. Doing so meant you only paid UK tax on any foreign income and gains (from the sale of assets) you brought into the UK. If you kept it offshore, there wasn't any UK tax due, in effect it was your choice to a certain extent.
There was no charge if you used the remittance basis until you had been a UK tax resident for more than 7 of the last 9 tax years. After 7 years charges were then applied to claim it.
The Foreign Income and Gains rules (FIG) came in from April 2025 and have changed things considerably. Here's how FIG works:
You now have 4 years of breathing room, with no remittance penalties! However, at the end of the 4 years you'll be taxed like every other UK domiciled person, and that's on your full global income and gains!
You have to make a claim on your self assessment tax return by no later than 31 January in the second tax year following the tax year you want relief for.
So, if you were claiming relief for the 2025/26 tax year, this would need to be submitted with your tax return by 31 January 2028.
You also need to:
What if you have foreign income losses, or foreign capital losses in a tax year? Unfortunately these aren't deductible under FIG!
Also, making claims through FIG automatically means you lose entitlement in the relevant tax year to:
If you leave the UK during the 4 year FIG window (when you're eligible for it), you don't necessarily lose your benefits. Instead you only receive relief for the years that you were actually resident.
So, if you qualify in years 1, 2, and 4, but you were out of the UK in year 3, then you only receive FIG benefits for 3 years.
The FIG regime applies to people who are both UK domiciled and non-UK domiciled.
If you’re a UK domicile who’s been away for 10+ years, you might also qualify for the regime when returning.
The good news is if you were claiming the remittance basis in previous years, you might qualify for transitional relief.
You can 'rebase' your foreign assets to their value on 5 April 2017 and then potentially reduce quite significantly your future capital gains when you sell.
To qualify, you must:
Where you have money that is based offshore (namely outside of the UK), you may be concerned about how, if ever, you can bring it to the UK without incurring a large tax bill. Thankfully there's a tax regime for this in the way of the TRF.
TRF provides a one time window of opportunity if you've historically used the old remittance basis to bring your foreign income and gains into the UK and benefited from a much lower tax rate. Now, instead of being subject to the usual income and capital gains tax rates, any of your qualifying funds are taxed at just 12%! This is subject to bringing the relevant income and gains into the UK within a specific timeframe.
Where you claimed the remittance basis you'll have from 6 April 2025 to 5 April 2027 to be able to bring the funds into the facility using the 12% rate. The last year to bring funds in will be the 2027/28 tax year albeit the tax rate then rises to 15%. To be eligible you need to have claimed the remittance basis in at least 1 year between the tax years 2017/18 and 2024/25, and you can't have been UK-domiciled before 2025/26.
TRF is voluntary, you don't have to use it but it could be very useful to you if you're:
Of note, TRF only applies to income and gains that were realised before 6 April 2025! You'll also need to prove that they were kept offshore. Any earnings after that date fall under the FIG rules, so there's no opportunity to mix them.
If you’re sitting on historical foreign funds, this could be the ideal time to get professional advice. The key is to act within the somewhat narrow timeline and ensure the right funds are repatriated.
Firstly you need to be certain that you're leaving the UK, this means you'll need to establish whether you'll remain a UK tax resident but spend less time in the country, or if you really will become a non-UK tax resident. Review your circumstances and day count against the Statutory Residence Test so that you can determine if, and/or which tax year you're likely to be classified as non-UK resident.
When you stop being a UK resident, your tax obligations likely change significantly:
If you were employed and didn’t file tax returns, use Form P85 to tell HMRC you’ve left and check if you’re owed a refund.
Still own UK property? Planning to rent it? You might need to register as a non-resident landlord. And selling later? Your capital gains tax could change depending on whether the property was your main home.
If you’ve lived in the UK for at least 10 of the last 20 tax years, the government may still treat you as a long-term UK resident for Inheritance Tax (IHT). That's the case even after you’ve moved abroad!
This lingering connection if you like is referred to as the 'IHT tail'. How long it follows you depends on how many years you were based in the UK prior to leaving:
The vast and complex set of regulations around tax residency in the UK, and how they interact to your personal circumstances, highlight the need to consult a tax professional. If you're not planning ahead then you're likely going to end up paying more in tax than you need to.
An advisor can help you navigate the vast myriad of tax legislation and processes so as to:
The earlier you receive advice, the likely more options you'll have. Finally, if you're departing the UK, consider carefully the jurisdiction you're moving to and becoming a resident in. Doing so prior to departure may even provide further planning opportunities.
The content of this post was created on 29/10/2025.
Please be aware that information provided by this blog is subject to regular legal and regulatory change. We recommend that you do not take any information held within our website or guides (eBooks) as a definitive guide to the law on the relevant matter being discussed. We suggest your course of action should be to seek legal or professional advice where necessary rather than relying on the content supplied by the author(s) of this blog.
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