Leaving the UK: a complete tax guide for moving abroad

When you leave the UK your liability to UK tax narrows from worldwide income to, broadly, UK-source income and certain gains, but only once you have actually become non-resident under the Statutory Residence Test (RDR3, GOV.UK). Until that point you remain a UK tax resident taxed on your worldwide income, so the move abroad and the change in tax status are two separate events that do not always happen on the same day.

In practice three questions decide everything that follows. First, are you non-resident for the 2026/27 tax year under the SRT? Second, does split-year treatment apply so that the year is divided into a UK part and an overseas part? Third, what UK-source income or assets do you keep, because those can stay within UK tax even after you go. Domicile no longer drives the answer for most people: since 6 April 2025 the UK has used a residence-based system, and the four-year Foreign Income and Gains (FIG) regime has replaced the old non-dom remittance basis.

Getting these three points settled early matters because they determine which forms you file, whether you are owed a refund, and whether a future return to the UK could reopen the year you thought you had closed.

You tell HMRC you are leaving the UK by submitting form P85, unless you already complete a Self Assessment tax return for the year you leave, in which case you report your departure on that return instead and do not need a P85 (GOV.UK). The P85, titled "Get your Income Tax right if you're leaving the UK", lets HMRC update your record, work out your residence position for PAYE and process any repayment of overpaid tax.

You can submit the P85 online through your HMRC account or by post. You will normally send your P45 parts 2 and 3 from your final UK employer with it. If a refund is due, HMRC issues a cheque to a UK address (yours or a nominee's) and will not pay currency-conversion or overseas-transfer fees, so it is often worth keeping a UK bank account open until any repayment arrives.

If you have UK rental income, are a company director, are self-employed or have other reasons to be in Self Assessment, you will likely keep filing UK returns after you leave. The 2026/27 return is due online by 31 January 2028, and the move and any split-year claim are made on the residence pages (SA109). Choosing the right route, P85 or Self Assessment, on day one avoids duplicate claims and delayed refunds.

Whether you remain UK tax resident after leaving is decided by the Statutory Residence Test, not by where you physically live, so it is possible to move abroad and still be UK resident for the whole tax year. The SRT works through a fixed order: the automatic overseas tests, then the automatic UK tests, then the sufficient ties test.

The automatic overseas tests are the quickest route to non-residence. You are automatically non-resident for 2026/27 if you were UK resident in one or more of the previous three tax years and spend fewer than 16 days in the UK, or if you were resident in none of those three years and spend fewer than 46 days. A third test covers those who work full-time abroad across the year, broadly with fewer than 91 UK days and fewer than 31 days on which more than three hours of work is done in the UK. If none of the automatic tests settles your status, the sufficient ties test weighs your UK connections (family, accommodation, work, 90-day and country ties) against the number of days you spend here.

Counting days correctly and managing ties in your first year abroad is where mistakes are expensive, because a single extra tie or a handful of extra days can flip you back to UK resident. Our SRT calculator at /tools/srt-calculator gives you a quick read, and the dedicated guide on the statutory residence test sets out each test in full.

Split-year treatment lets you be taxed as a UK resident only up to your departure date and as a non-resident for the rest of the 2026/27 tax year, so your overseas earnings after you leave fall outside UK tax even though you were resident for part of the year. It applies automatically when you meet the conditions; it is not optional and it cannot be claimed if you do not fit one of the statutory cases.

For people leaving, the relevant cases are usually Case 1 (starting full-time work overseas), Case 2 (the partner of someone starting full-time work overseas) and Case 3 (ceasing to have a UK home). Each has detailed conditions: Case 1, for example, requires sufficient hours of overseas work across the relevant period and tight limits on UK working days and UK days overall. You must still pass the SRT as non-resident for the year as a whole for the split-year rules to bite.

Consider a hypothetical example. Imagine someone who leaves the UK on 31 August 2026 to start a full-time job in Dubai. If they meet Case 1, their UK employment income to 31 August 2026 is taxed in the UK, while their Dubai salary from 1 September 2026 onwards is outside UK tax. Pinning down the exact split date and the matching case is essential, because HMRC will test the conditions precisely.

Yes, you are often due a refund in the year you leave the UK, because PAYE spreads your tax-free Personal Allowance (£12,570 for 2026/27) evenly across the full tax year, so leaving part-way through usually means you paid more tax than your actual UK income for the year required. The unused portion of your allowance can be repaid.

The refund is claimed through the P85, or through your Self Assessment return if you file one. As a rough hypothetical illustration, if someone stops UK employment in July 2026 having used only a few months of their allowance, a meaningful slice of the PAYE deducted in those months can come back, depending on their exact pay and tax codes. The figures are personal to each case and should be calculated, not assumed.

Two practical points. First, a refund cheque is sent to a UK address, so keep a UK account or nominate someone. Second, do not file a P85 if you are also filing Self Assessment for the year, as the refund is handled within the return. Horizon prepares departure-year refund claims on a fixed fee, so you know the cost against the likely repayment up front.

Even after you become non-resident, certain UK-source income remains taxable in the UK, most commonly rental profits from UK property, some UK pensions, UK-source employment income for duties performed here, and certain UK trading income. Becoming non-resident removes your worldwide liability but not your UK-source liability.

UK rental income is the most common ongoing obligation. Under the Non-resident Landlord Scheme, your letting agent (or a tenant paying you directly above the scheme threshold) must deduct basic-rate (20%) tax from your rent unless HMRC approves your application on form NRL1 to receive it gross. Even with approval, the income is not exempt: it is still reported and taxed through Self Assessment. Our non-resident landlord tax guide covers this in detail.

Other items to watch include UK dividends (charged at the 2026/27 rates of 10.75%, 35.75% and 39.35% above the £500 dividend allowance, though "disregarded income" rules can cap a non-resident's liability), UK government and certain occupational pensions, and gains on UK land and property, which remain within UK tax for non-residents. A double tax treaty between the UK and your new country often reallocates or relieves some of these, which is why the destination country matters so much.

If you sell assets while non-resident, most gains escape UK Capital Gains Tax, but the temporary non-residence rules can claw those gains back into UK tax if you return to the UK within five complete tax years of leaving. This is the single biggest trap for people who leave, realise a large gain abroad, and then come home sooner than planned.

The rules broadly apply if you were UK resident in at least four of the seven tax years before departure and your period of non-residence is five years or less. Gains realised during that period (other than UK land and property, which is taxed when sold regardless) are treated as arising in the tax year you return, and taxed then. So leaving to crystallise a gain only works permanently if you stay non-resident for more than five complete tax years.

Note that UK residential property gains are always within scope for non-residents and are charged at 18% or 24% for 2026/27, with the annual exempt amount now just £3,000. Non-resident disposals of UK land and property must be reported to HMRC on a Capital Gains Tax on UK property return within 60 days of completion (GOV.UK guidance). For anyone planning a sale around a move, sequencing the disposal against the departure date and the five-year clock is where careful planning pays for itself.

The single most powerful lever when leaving the UK is the date you go, because it sets your split-year point, your day count under the SRT, and the start of the temporary non-residence clock. Small changes to the departure date can move income and gains between tax years and between UK and overseas taxation.

Key timing decisions in 2026/27 include: when to take a bonus, dividend or pension lump sum (before or after you become non-resident), when to dispose of investments relative to the five-year temporary non-residence window, and how to structure your UK days in the first overseas year so you do not accidentally fail the SRT or a split-year case. For an owner-managed company, the order of taking salary versus dividends around departure can change the UK tax outcome materially, especially with dividend rates now at 10.75% and 35.75% for 2026/27.

Consider a hypothetical: deferring the sale of a share portfolio until the individual is safely past five complete tax years of non-residence can avoid the temporary non-residence charge entirely, whereas selling in the second year abroad and returning in the fourth would bring the gain back into UK tax on return. Our relocation planner at /tools/relocation helps you model these dates before you commit.

Living abroad can create gaps in your National Insurance record (GOV.UK guidance), and from 6 April 2026 you can no longer pay voluntary Class 2 contributions for periods spent abroad, so Class 3 at £18.40 a week (£956.80 for a full year) is now the main way most people protect their UK State Pension while overseas. The cheaper Class 2 route that many expats relied on has closed for new periods abroad from the 2026/27 tax year.

A narrow group can still pay Class 2 for time worked abroad, mainly the self-employed treated as UK self-employed under a reciprocal social security agreement and volunteer development workers. For everyone else, voluntary Class 3 is the option, and new applications to pay Class 3 for periods abroad now require either at least 10 continuous years of prior UK residence or at least 10 qualifying years already on your record. If you are already paying Class 3, you are not caught by the new test.

Why bother? The new State Pension is £241.30 a week for 2026/27. You need 10 qualifying years to receive any new State Pension and 35 years for the full amount if your record began after 6 April 2016 (a proportion applies between 10 and 35 years). Check your record before you leave and decide whether topping up is worthwhile; if you are moving to a country with a UK social security agreement, you may instead pay into the local system, so coordinate the two.

Where you move to changes the answer as much as the UK rules themselves, because each destination has its own residence, tax and treaty position that interacts with your UK obligations. The same departure can produce very different outcomes depending on the country.

• United States: the US taxes citizens and green-card holders on worldwide income wherever they live, and Americans in the UK face a complex overlap of UK residence and US citizenship-based taxation. The UK-US treaty and foreign tax credits relieve double taxation, but pensions, investments and the timing of a move need careful coordination on both sides.
• Australia: a popular destination where the UK split-year rules and the Australian residency tests must line up. Australia taxes residents on worldwide income, so the date you become Australian resident relative to your UK departure date affects which country taxes your transitional income and gains.
• United Arab Emirates: with no personal income tax in the UAE, the prize is becoming UK non-resident cleanly so that overseas earnings escape UK tax. The risk is the SRT day count and the temporary non-residence trap if you later return, so discipline on UK days is essential.
• Italy: Italy offers attractive regimes for new residents, but they interact with UK-source income and the UK-Italy treaty in detailed ways. Pension and investment income, and the precise residence start dates, need mapping against both systems.
• Thailand: Thailand taxes residents on certain foreign income brought into the country, and the interaction with UK rental, pension and investment income, plus the UK-Thailand treaty, calls for a combined plan rather than treating each country in isolation.

In every case the double tax treaty (GOV.UK treaty list), the foreign country's residence rules and your UK position have to be planned together. Horizon's cross-border specialism is exactly this dual-side planning, delivered on a fixed fee so the advice cost is known before you move.

Before you leave the UK, work through a short checklist so nothing is left to chance and any refund or relief is captured. The items below cover the essentials for a 2026/27 departure.

• Confirm your residence position under the SRT, including a realistic first-year UK day budget.
• Identify whether split-year treatment applies and pin down your exact departure date and case.
• Submit form P85 (or report on Self Assessment) and send your P45 parts 2 and 3.
• Claim any departure-year refund and keep a UK bank account or nominee for the cheque.
• Register any UK rental income under the Non-resident Landlord Scheme (NRL1) and keep filing Self Assessment.
• Map any planned asset sales against the five-year temporary non-residence clock and the 60-day reporting deadline.
• Check your National Insurance record and decide on voluntary Class 3 (£18.40 a week) to protect your State Pension.
• Review the destination country's residence rules and the relevant double tax treaty before you go.
• Tell banks, pension providers and HMRC of your new address and update your tax code.

Working through this list with an adviser before departure, rather than after, is what turns a stressful move into a clean one. Horizon can run the whole checklist with you on a fixed fee.

Your ISAs do not close when you leave the UK. The wrapper survives, and GOV.UK confirms you still get UK tax relief on the money and investments held inside it. What stops is new money: once you move abroad and become non-UK resident you cannot pay into an ISA, unless you are a Crown employee working overseas or their spouse or civil partner. You must tell your ISA provider as soon as you stop being UK resident, you can still transfer the account to another provider while abroad, and if you later return and become UK resident again you can subscribe once more, subject to the annual allowance. We are not aware of any carve-out for Lifetime ISAs, so treat the same rule as applying there too: no new payments as a non-resident, which also means no further 25% government bonus, since the bonus only arises on money you pay in.

The catch is that UK tax-free only binds HMRC. Most destination countries do not recognise the ISA wrapper at all: once you are tax resident there, they will usually tax the interest, dividends and gains inside the account under their own rules, exactly as if you held the investments directly. Double tax treaties rarely rescue the position, because there is no UK tax on the income for a treaty to relieve, and some countries also treat pooled funds held by their residents unfavourably, so what you hold inside the ISA can matter as much as the wrapper itself.

Junior ISAs are more forgiving. GOV.UK confirms that if your child moves abroad you can still add cash to their existing Junior ISA, up to £9,000 in the 2026/27 tax year, although you cannot open a new one for a child living outside the UK unless you are a Crown servant they depend on, and some providers apply stricter policies of their own. Decisions worth making before you leave:

• Confirm your subscription position for the year you leave before adding money: GOV.UK's current guidance says you cannot pay in once you move abroad and become non-UK resident, so do not assume you can keep using your allowance after your departure date.
• Tell every ISA provider as soon as you stop being UK resident, and ask whether they will keep serving you at an overseas address; some restrict or close accounts for non-residents.
• Find out how your destination taxes ISA income and gains before you go; in some countries it is cleaner to realise gains while you are still UK resident and the account is still fully tax free.
• Decide whether to keep, transfer or encash each account: keeping the wrapper preserves its UK tax-free status and your ability to subscribe again if you return.
• Keep Junior ISAs running if it suits the family; contributions can continue after the child moves abroad, subject to provider policy.

This is general guidance rather than personal advice: how your ISAs are taxed after you leave depends on where you are going, so take advice on both sides of the move before you commit.