Moving Abroad

Key Tax Considerations When Leaving the UK

UK Tax Residency Status

The starting point for any outbound tax planning is determining your UK tax residency status under the Statutory Residence Test (SRT). Your residency status will determine whether you are subject to UK tax on your worldwide income or just on UK-source income.

Factors such as how many days you spend in the UK, whether you have a home here, or whether you work full-time abroad all come into play, plus many more factors. Even if you physically leave the UK, you may still be considered a UK tax resident, particularly if you maintain ties here.

Determining your UK residency status before you leave can provide peace of mind regarding the tax treatment of your income and may enable you to plan the timing of income receipts for maximum tax efficiency.

Timing Your Move

Building on the above, the timing of your departure can have a significant effect on your tax liability. For instance, if you leave partway through the tax year, you may qualify for split-year treatment, which means only a portion of your income will be subject to UK tax.

However, split-year treatment is not automatic, and it depends on your individual circumstances and specific eligibility criteria. For this reason, obtaining professional advice on split-year treatment before you leave is essential.

Capital Gains Tax (CGT) Planning

If you are planning to dispose of assets (such as shares, property, or a business), the timing of the disposal in relation to your tax residency status can have a big impact. Leaving the UK before a disposal may offer tax planning opportunities, but there are traps, such as the temporary non-residence rules, that can claw back reliefs if you return to the UK (and be a UK tax resident) within five years.

UK residential property remains subject to UK CGT, even if you’re no longer a tax resident. Therefore, careful planning is essential when disposing of such property, and the appropriate tax and compliance returns must still be submitted.

Inheritance Tax (IHT) Exposure

Previously, leaving the UK did not automatically exempt you from paying UK IHT; your liability was primarily determined by your domicile status. Traditionally, UK-domiciled individuals remained subject to IHT on their worldwide assets even after relocating abroad.

However, from 6 April 2025, the concept of domicile as a relevant connecting factor for UK tax purposes has been replaced with a system based on tax residence. As a result, the deemed domicile rules will no longer apply from this date.

These changes have created uncertainty amongst taxpayers around IHT exposure for individuals moving abroad, however this also creates opportunity for IHT planning if you are already considering moving abroad.

UK Income

Even after leaving the UK, many individuals continue to have UK-source income, such as rental income, dividends from UK companies, or pensions. These income streams may remain taxable in the UK and could also be taxed in your new country of residence, unless relief is available under a Double Taxation Agreement. Certain reliefs such as your personal allowance for income tax or principle residence relief for capital gains tax could also be lost if you move abroad.

There may also be filing requirements, for example a non-resident landlord tax return if you have UK rental income from properties, or 60 day reporting for capital gains tax if you dispose of a property.

Ensuring ongoing and up to date tax advice will ensure that you remain compliant with your UK tax affairs whilst also maximising any planning opportunities.

Exit Charges

If you’re planning to become non-UK resident, it’s important to understand the potential exit charges that may arise. The UK tax system treats certain assets as if they were disposed of when you leave the country, potentially triggering capital gains tax even though no sale has occurred. This can include residential properties or business assets held directly or through companies.

At Stratos, we provide expert advice to help you identify, plan for, and mitigate these exit charges, ensuring your move abroad is tax-efficient and doesn’t lead to unexpected liabilities.

Why Stratos?

At Stratos, we provide bespoke outbound tax planning services tailored to your personal goals and financial circumstances. Whether you are relocating for work, retirement, or lifestyle reasons, we can ensure your move is as tax efficient as possible.

Our services include:

• Statutory Residence Test and Residency assessments
• Split-year treatment advice and timing strategies
• CGT and IHT planning
• Ongoing UK tax return support and compliance for non-UK residents and their families

Moving abroad is a major life decision. With the right planning, you can minimise your tax exposure, protect your wealth, and gain peace of mind as you settle into your new home.