Moving to Hungary from the UK: the 2026/27 tax guide

Hungary runs one of the simplest personal tax systems in Europe: a flat 15% on nearly all income, whether that is salary, self-employment profit, dividends, interest or capital gains. There are no progressive bands, no general wealth tax, and corporation tax is 9%. For a UK higher-rate or additional-rate taxpayer, the arithmetic is striking on paper.

But the deciding factor for your UK bill is not your Hungarian address card or your flat in Budapest. It is the UK Statutory Residence Test (RFIG20000, GOV.UK), a strict day-counting and ties-based mechanism that decides, year by year, whether the UK can still tax your worldwide income. Three things have to line up: you break UK residence under the SRT, you claim split-year treatment where you leave mid-year, and you deal properly with the income and gains that stay UK-taxable regardless of where you live. Get those right and the flat-tax outcome is real; miss one and the UK keeps taxing income you assumed had left with you.

The SRT is applied in order: first the automatic overseas tests (which make you non-resident), then the automatic UK tests (which make you resident), then the sufficient ties test if neither is conclusive. For someone moving to Hungary, the automatic overseas tests are the target.

• First automatic overseas test: you were UK resident in one or more of the previous three tax years and spend fewer than 16 days in the UK in the current year.
• Second automatic overseas test: you were not UK resident in any of the previous three tax years and spend fewer than 46 UK days.
• Third automatic overseas test (the usual route for movers): you work full-time abroad across the tax year, broadly an average of at least 35 hours a week with no significant breaks, spend fewer than 91 days in the UK and work here on no more than 30 of those days.

If you cannot meet an automatic overseas test, the sufficient ties test combines your UK day count with the ties you keep (family, accommodation, work, a 90-day prior-presence tie and, for recent leavers, a country tie). The more ties you retain, the fewer UK days you are allowed. Budapest is a short flight from every UK airport, and frequent trips back are exactly how residence plans fail, so model your position with our SRT calculator at /tools/srt-calculator before you book anything.

Most people do not emigrate neatly on 6 April. Where the conditions are met, split-year treatment divides the tax year into a UK part (taxed on worldwide income) and an overseas part (taxed only on UK-source income), so income arising in Hungary after the split date is outside UK income tax for that year. The common gateways for leavers are starting full-time work overseas and ceasing to have a UK home, each with its own conditions on timing and UK day limits.

The admin is the same as for any departure. File a P85 (GOV.UK) if you are employed or have a pension, and a final Self Assessment return for your year of departure. Split-year treatment is claimed on the SA109 residence pages, not by the P85, and the SA109 cannot be filed through HMRC's own free online service, so you will generally need commercial software or an agent. Keep records of travel dates, work patterns and your Hungarian accommodation: residence questions are evidenced after the fact.

Becoming non-resident does not switch off UK tax on UK-source income, and because Hungary taxes its residents on worldwide income, some items can be in both nets at once, with the treaty deciding who gives way. The table below shows how the two systems treat the main items.

Three further UK rules deserve their own line. First, the temporary non-residence trap: if you were UK resident in at least four of the seven tax years before leaving and return within five years, gains and certain income realised while abroad can be taxed in your year of return. Second, the residence-based IHT rules that took effect on 6 April 2025: if you were UK resident for at least 10 of the previous 20 tax years you are a long-term resident, and your worldwide estate stays within UK inheritance tax for a tail of up to 10 years after you leave, tapering with how long you were here. Third, voluntary National Insurance: most leavers should apply on form CF83 to keep paying Class 2 or Class 3 contributions, because a full UK State Pension is cheap to protect and expensive to rebuild.

Hungarian tax residents are taxed on worldwide income at a flat 15%. That single rate covers employment income, self-employment, rental income, dividends, interest and most capital gains. You generally become Hungarian resident if your only permanent home is there, if your centre of vital interests is there, or if your habitual abode is in Hungary. For UK nationals post-Brexit there is no freestanding 183-day trigger, although spending most of the year there will usually establish habitual abode; EEA nationals with a Hungarian registration card who spend at least 183 days there in a calendar year qualify automatically. There is no net wealth tax.

The social contribution reality matters more than the headline rate for anyone earning a salary. Employees pay an 18.5% social security contribution on top of the 15% income tax, and employers pay a 13% social contribution tax (szocho), so the true wedge on Hungarian employment income is far above 15%. Szocho also touches investors: dividends (other than on shares traded on an EEA-regulated stock exchange) and certain interest carry the 13% social contribution tax as well as the 15% income tax, but for dividends the szocho is capped once the relevant income reaches 24 times the monthly minimum wage in the year, which keeps the all-in rate on large dividends close to 15%. Long-term investment accounts are better still: 10% tax after three years and full exemption after five.

The honest boundary: Horizon advises on the UK side of the move and coordinates with a local adviser in Hungary for local filings. The Hungarian figures above are verified against current professional summaries for 2026, but your own Hungarian registrations and returns belong with local counsel.

Hungary's corporation tax rate is 9%, the lowest in the EU, applied to resident companies and Hungarian branches alike. Municipalities add a local business tax on a turnover-based measure, capped by law at 2%, and a minimum tax base rule of 2% of total revenue can apply. Large multinational groups within the Pillar Two rules face a 15% minimum effective rate, but that regime targets groups with global revenues above EUR 750 million, not owner-managed companies.

If you own a UK limited company, the move needs a decision, not drift. A company incorporated in the UK stays within UK corporation tax, and if you run it from your desk in Budapest, Hungary can also treat it as Hungarian-resident because its place of effective management is there, leaving the treaty tie-breaker to settle which country taxes it. Running a UK company from abroad is workable with care, but many movers do better either closing the UK company before leaving or building afresh with a Hungarian Kft at 9%. Dividend flows need the same attention: as a Hungarian resident, dividends you draw are taxed at Hungary's flat 15% (plus capped szocho where it applies), while UK dividends may also face UK claims under the disregarded-income rules and the treaty. Sequence the exit, the extraction and the new structure together rather than one at a time.

A full double taxation convention between the UK and Hungary entered into force on 28 December 2011, and has had effect in the UK since 6 April 2012 for income tax and capital gains tax (from 1 January 2012 for taxes withheld at source) and in Hungary since 1 January 2012 (GOV.UK).

Because Hungary taxes worldwide income, the treaty does real work here, unlike in territorial destinations. Its residence tie-breaker settles the years where both countries claim you, typically around your move; it allocates taxing rights over UK rental income, pensions, dividends and employment income; and its relief article stops the same income being fully taxed twice. As an EU member state, Hungary also exchanges financial account information with the UK automatically under the Common Reporting Standard, so HMRC can see Hungarian accounts held by UK-connected people. The move works because the rates are lawfully low and your UK exit is clean and documented, not because anything is out of sight.

Hungary suits people who will actually earn and live there: employees and contractors relocating to Budapest, founders happy to run a Hungarian company at 9% corporation tax, consultants billing international clients who want an EU base with a flat 15% on their profits, and investors who value the long-term investment account exemptions. It offers a genuinely low, simple system inside the EU rather than a special expat regime with an expiry date.

It suits people less well if their income is dominated by a heavy Hungarian salary (the 18.5% employee social contribution erodes the flat-tax advantage), if they expect to return to the UK within five years and trigger the temporary non-residence rules, or if their real aim is UK IHT protection on a short timeline. And like Cyprus or any other low-tax destination, it does nothing for UK property income and gains. Model the whole move, both sides, with our relocation tool at /tools/relocation before you commit to a date.