Published on and written by Cyril Jarnias
Moving abroad while maintaining ties with the United Kingdom almost always involves continuing to have tax obligations there. Between income tax, renting or selling a property, Council Tax, or the complex rules of tax residency, expatriates often find themselves in a veritable labyrinth.
This article details the main taxes applicable to expatriates with income or property in the United Kingdom: income tax, property taxation (Council Tax, Capital Gains Tax, Non-Resident Landlord Scheme) and the interaction with international tax treaties.
Understanding Tax Residency in the United Kingdom
Before talking about taxes, you need to know whether the United Kingdom considers you a tax resident or not. This status determines whether you will be taxed only on your UK-source income, or on your worldwide income.
The UK uses a highly codified mechanism, the Statutory Residence Test (SRT), in force since April 6, 2013. This test is applied separately for each tax year (from April 6 to April 5 of the following year) and is based on three sets of rules: automatic overseas tests, automatic residence tests, and then the “sufficient ties” test.
The SRT does not apply to National Insurance, which follows separate rules, but serves as a reference for income tax, Capital Gains Tax, and, since the 2025 reform, for Inheritance Tax under a system now based on residence.
Outline of the Statutory Residence Test
The SRT works through successive steps. It starts by checking if an “overseas” test (automatic non-resident) is met. If not, it looks at the automatic residence tests. If none of these criteria are met, it proceeds to the sufficient ties test, which combines the length of time spent in the UK and personal and economic ties with the country.
Numerical benchmarks illustrate the logic of the automatic tests.
Automatic Non-Residence Tests
An individual is automatically non‑resident if they meet one of the following criteria:
| Criterion | Main Condition | Consequence |
|---|---|---|
| Few days in the UK – recently resident | Resident in the UK for at least 1 of the 3 previous years and less than 16 days in the UK in the year | Automatic non‑resident |
| Few days in the UK – new non‑resident | Non‑resident in the UK for the 3 previous years and less than 46 days in the UK | Automatic non‑resident |
| Full-time work abroad | Works full-time abroad all year, less than 91 days in the UK and less than 31 days working more than 3 hours in the UK | Automatic non‑resident |
The full-time work abroad criterion is based on an average of at least 35 hours per week over a 365-day period, without a significant break of more than 30 days without work (excluding normal leave). It applies to both employees and the self‑employed.
Automatic Residence Tests
You become a UK tax resident as soon as one of the automatic residence tests is met:
| Test | Main Condition | Consequence |
|---|---|---|
| 183 days | 183 days or more spent in the United Kingdom in the tax year | Automatic resident |
| Only home in the UK | Have a home in the UK for at least 91 days, stay there for at least 30 days, and not have a stable home abroad where you spend at least 30 days | Automatic resident |
| Full-time work in the UK | Work full-time in the UK over a 365-day period, with more than 75% of working days in the UK | Automatic resident |
The concept of a “home” is stricter than just a vacation property: the accommodation must have a certain degree of permanence (main residence, long-term rented property, etc.).
The Sufficient Ties Test
If no automatic test applies, the SRT examines the number of days spent in the United Kingdom and the number of “ties” with the country. Five types of ties are considered:
To determine if an individual is considered a UK tax resident, several ties are evaluated. For example, a family tie exists if a spouse, partner, or minor child resides in the UK. An accommodation tie is established if a property is available in the UK for at least 91 days, with at least one night actually spent there. A work tie is considered if the person works more than 3 hours a day in the UK for at least 40 days in the year. A 90-day tie is satisfied if the person spent more than 90 days in the UK in at least one of the two previous tax years. Finally, a country tie applies only if you were a UK resident recently; in this case, the UK must be the country where you spend the most days in the year.
The number of ties required to become resident varies according to the number of days spent in the United Kingdom and whether you have been a tax resident in the three previous years.
For example, a person previously resident who spends 100 days in the UK will be considered resident if they have at least two ties (e.g., available accommodation and a spouse remaining in the UK). Conversely, a newcomer who spends only 70 days in the UK would need to have all four relevant ties (the country tie not applying) to be reclassified as resident.
Days Spent in the United Kingdom: How to Count Them?
In principle, a day is counted as a “UK day” if you are there at midnight. However, certain days can be disregarded under limited conditions:
Up to 60 days can be excluded in the case of exceptional circumstances beyond your control (sudden illness, travel restrictions…). Transit days in a UK airport without working or actually staying there are also excluded. Conversely, the ‘deeming’ rule can artificially increase the number of UK days for former residents with several ties to the country.
Given this framework, each expatriate must meticulously document their movements (tickets, passport stamps, activity statements) to be able to justify their position in case of an audit.
When moving to or from the UK mid-year, the tax year can, under certain conditions, be split into two periods: one where you are considered resident, and another where you are treated as non‑resident. In the “overseas” part, only UK-source income remains taxable.
This rule is crucial for expatriates leaving (or returning to) the UK mid-year, as it prevents being taxed in the UK on your worldwide income for the entire year when you only lived there part of the time.
Note: Under the new Foreign Income and Gains (FIG) regime effective from 2025, a split year still counts as a full year of residence for calculating the four-year period of this regime, as well as for the new Inheritance Tax rules based on length of residence.
Personal Income Tax: Residents and Non‑Residents
Once tax residency is clarified, the mechanics of income tax become clearer: a resident is generally taxable in the UK on their worldwide income, while a non‑resident is taxed only on their UK-source income.
Income Tax Rates
The UK applies a banded system, with a Personal Allowance that allows you to receive a certain amount of income tax‑free.
For the 2025/26 tax year, the rates in England, Wales, and Northern Ireland are as follows:
| Taxable income band (excluding Personal Allowance) | Rate |
|---|---|
| £0 – £12,570 | 0% (Personal Allowance) |
| £12,571 – £50,270 | 20% (basic rate) |
| £50,271 – £125,140 | 40% (higher rate) |
| Over £125,140 | 45% (additional rate) |
The standard Personal Allowance is £12,570. It is reduced for high incomes: for every £2 of income over £100,000, the allowance decreases by £1. This mechanism results in the complete loss of the allowance from £125,140 onwards, and an effective tax rate of 60% in this zone.
In Scotland, the rates are more progressive and have more bands, with rates from 19% (Starter rate) up to 48% (Top rate), but the basic Personal Allowance remains the same.
New Arrivals and the Foreign Income and Gains Regime
Since April 6, 2025, the historic regime for “non‑doms” and the remittance basis has been abolished for new income and gains. The system has been replaced by one based entirely on residence, with a transitional arrangement for certain situations.
People who have not been UK tax residents in the ten years prior to their arrival (Qualifying New Residents) can elect for the Foreign Income and Gains (FIG) regime. For their first four years of residence, this regime allows them to exclude their foreign-source income and gains from UK tax, including employment income for days worked abroad.
This choice comes at a cost: by electing for the FIG regime, you forfeit the Personal Allowance and the annual Capital Gains Tax exemption, and you also cannot offset foreign losses. However, this regime is particularly attractive for wealthy expatriates whose main income comes from abroad.
Non‑Residents: Tax Limited to UK-Source Income
A non‑resident is, in principle, taxed in the UK only on:
For French tax residents, here are the main types of UK-source income that may be subject to UK tax.
Salaries earned for days actually worked on UK territory.
Professional income from a self‑employed activity carried out in the UK.
Rental income from properties located in the UK.
Certain pension, annuity, and private retirement income of UK source.
Potentially, other investment and savings income of UK source.
Non‑residents are normally not taxed in the UK on their foreign income, even if it remains in a UK bank account. However, they sometimes must file a Self Assessment tax return if they have significant UK-source income, particularly rental income.
Furthermore, non‑residents do not automatically get the Personal Allowance. They may still be entitled to it if they are UK nationals, nationals of an EEA country, former Crown servants, residents of the Isle of Man or the Channel Islands, or if a tax treaty provides for it with their country of residence.
Rental Income: The Non‑Resident Landlord Scheme
Many expatriates keep a rental property in the UK. In this case, even as a non‑resident, the rent remains taxable to UK tax, and is subject to a specific scheme: the Non‑Resident Landlord Scheme (NRLS).
Who is considered a non‑resident landlord?
The NRLS targets individuals whose main residence is outside the UK and who receive rent from UK properties. Those affected include:
– individuals living abroad for more than six months a year;
– companies whose registered office or place of effective management is outside the UK;
– trustees of a trust where all trustees reside abroad;
– partnerships, with each partner treated separately for their share of income.
Subtle point: You can be, for the purposes of the NRLS, a “non‑resident landlord” while being a UK tax resident under the SRT, and vice versa. The scheme focuses on the primary location of your home and property management.
Role of Agents and Tenants
By default, the NRLS requires that tax be deducted at source from the gross rent (after certain expenses managed by the agent) before it is paid to the expatriate owner. This tax collection role falls to:
– the letting agent in the UK, provided they collect the rent on behalf of a non‑resident owner;
– the tenant themselves if there is no agent and the gross rent exceeds £100 per week (threshold per tenant per owner).
Agents and certain tenants must:
– deduct tax at the basic rate of income tax;
– remit it quarterly to HMRC (periods ending June 30, September 30, December 31, and March 31);
– prepare an annual return and a certificate for the owner, summarizing rent received, expenses, and tax deducted.
This scheme aims to prevent rent leaving the country without any deduction being made, which would complicate tax collection.
Receiving Rent “Gross”: Opting for Receipt Without Deduction
Non‑residents can, however, apply to receive their rent without deduction at source by registering with HMRC using specific forms (NRL1 for individuals, NRL2 for companies, NRL3 for trusts). HMRC generally accepts this option if:
To be compliant, the owner must either be up to date with their UK tax obligations, or never have been subject to UK tax before, or not expect to owe any tax for the year in question.
Tax is still due, but the owner pays it directly through their annual Self Assessment, which allows them to more easily deduct all allowable expenses (loan interest, agency fees, repair costs, insurance, etc.) and avoid potential overpayments.
Income Subject to NRLS and Deductible Expenses
The income covered by the NRLS is very broad: rent from furnished or unfurnished dwellings, commercial premises, land, ground rent, premiums from certain leases under 50 years, income from hunting or filming rights, or income from caravans and houseboats considered as real property.
For calculating the tax deducted, the agent or tenant can deduct expenses they have paid on the owner’s behalf, provided these expenses would reasonably be considered deductible in calculating the rental profit.
– agency fees, tenant-finding costs, inventories;
– repair and maintenance work (but not structural improvements that increase the property’s value);
– building and contents insurance premiums, rent guarantee insurance;
– local taxes like Council Tax when the property is vacant but available for rent;
– loan interest and financing costs, though with restrictions for residential properties.
The owner remains obligated to declare the annual net income in their tax return and can accurately adjust the amount of deductible expenses, including those they paid themselves.
Council Tax and Other Local Taxes: Occupancy Taxation
Beyond national income and gains taxes, expatriate property owners in the UK are liable for Council Tax, the local tax levied by municipal authorities in England, Scotland, and Wales (in Northern Ireland, the equivalent is called “Rates”).
How Does Council Tax Work?
Council Tax is an annual tax due by households occupying a residential property. It funds local services such as waste collection, road maintenance, street lighting, police, or libraries. Each property is assigned a “band” (value category) based on its estimated value at a reference date:
– in England and Scotland, based on the value on April 1, 1991;
– in Wales, based on 2003 values.
The bands range from A to H (A to I in Wales), with A corresponding to the least valuable properties. The final Council Tax amount results from the combination of this band and the rate set by the local council.
Bills are usually payable in ten monthly installments, with an option to switch to twelve monthly installments on request. Accepted payment methods include direct debit, online payment, bank transfer, or telephone payment.
Who Pays Council Tax When You’re an Expatriate?
The payment obligation follows a hierarchy of responsibility. The person liable to pay is, in order:
1. the resident owner‑occupier; 2. the resident leaseholder; 3. the resident tenant; 4. the resident with a license to occupy; 5. any other resident (including squatters); 6. failing a resident, the non‑occupying owner.
This means that an expatriate who rents their property to a regular tenant is not normally liable for Council Tax: it is the occupant who is liable. However, if the property is empty, rented out for short-term lets like Airbnb, or used as a second home without permanent occupation, the owner may become liable again.
Expatriates must inform their council when they leave the country or change the occupancy status of the property, to update the Council Tax calculation, potentially apply for exemptions for empty homes, or avoid the application of a surcharge on “empty homes”.
Discounts, Exemptions, and Premiums for Empty Properties
Council Tax operates on the assumption of two adult “non‑disregarded” persons per dwelling. Discounts apply if this is not the case:
The percentage reduction of Council Tax applicable if all occupants of the property are ‘disregarded’ persons, such as full-time students.
Certain categories of people are not counted in the number of occupants: full‑time students, apprentices, foreign language assistants, severely mentally impaired persons, certain carers living with the cared‑for person, etc.
There are also full exemptions for certain types of properties or situations, for example:
– dwellings occupied solely by students;
– university halls of residence;
– certain empty properties undergoing major works or unfurnished and unoccupied for a limited period;
– armed forces accommodation;
– dwellings occupied solely by persons under 18 or by severely mentally impaired persons.
Conversely, councils can apply “premiums” on properties empty and unfurnished for more than two years (up to 100% extra), five years (200%), or ten years (300%). An expatriate keeping a rarely occupied home could therefore see their bill skyrocket if they don’t take action.
Capital Gains Tax and UK Property for Non‑Residents
Selling UK property as an expatriate no longer means automatically escaping UK taxation. Following a series of reforms between 2015 and 2019, non‑residents are now fully within the scope of Capital Gains Tax (CGT) for most property transactions.
Scope of CGT for Non‑Residents
A non‑resident individual is taxable in the UK on the gain realized on the disposal of:
– a residential property located in the UK;
– a non‑residential building (offices, shops, warehouses, land, etc.);
– indirect interests in “property‑rich” entities deriving at least 75% of their value from UK real estate.
Non‑resident companies are no longer subject to CGT but to UK corporation tax on their property gains since 2019. Non‑resident trusts are liable for CGT at the rate applicable to trusts.
Determining the Taxable Gain: “Rebasing” Dates
To avoid retroactively taxing increases in value that occurred long before the regime came into effect, the legislator introduced “rebasing” dates:
| Property Type | Default Rebasing Date | Possible Methods |
|---|---|---|
| UK residential held before 6 April 2015 | Value at 5 April 2015 | 2015 rebasing (default), time apportionment, or calculation over entire period |
| UK non‑residential / indirect interests held before 6 April 2019 | Value at 5 April 2019 | 2019 rebasing (default) or calculation over entire period (mainly useful for a loss) |
| Property acquired after these dates | No rebasing | Gains over entire period of ownership |
For an expatriate who bought a London apartment in 2010 and sells it in 2026, the increase in value between 2010 and 2015 is in principle outside the scope of UK CGT; only the portion after April 5, 2015 is included in the default calculation. The taxpayer can, however, elect for another method (time apportionment or calculation over the entire period) if it is more favorable, especially in the case of an overall loss.
In practice, determining the correct calculation method, obtaining a reliable valuation as of April 5, 2015 or 2019, and offsetting any prior losses often require specialist advice.
Tax Rates and Annual Exemption
CGT rates for individuals depend on the nature of the asset and the level of taxable income. Residential property gains are taxed at higher rates than gains on other assets.
For recent years, the typical rates are: the trends in social behavior and technological developments.
The tax rate on the portion of a gain from the disposal of a main residence not fully exempt, falling within the basic rate income tax band.
Each individual benefits from an Annual Exempt Amount, of £3,000 for 2025/26. This exemption does not carry forward from year to year and is not available to those using the FIG regime. Expatriates must therefore monitor the timing of their disposals and the use of this exemption.
Reporting and Payment Deadlines
Property disposals by non‑residents are subject to an accelerated reporting and payment regime:
– the disposal must be reported to HMRC within 60 days of completion (property transfer);
– any estimated tax due must be paid within the same period, under penalty of fines and interest.
Even if no tax is due (loss or full exemption), the report remains mandatory, which surprises many expatriates used to reporting only actually taxable events.
The gain and tax calculation is done in British pounds sterling. It is essential to convert the acquisition price and the disposal price using the exchange rates in effect on the respective dates of these transactions, not simply their current value in pounds.
Tax Treaties and Temporary Non‑Residence Rules
The UK’s tax treaties with other countries often contain specific rules on the allocation of taxing rights for property gains. In the vast majority of cases, the country where the property is located retains the right to tax the gain, meaning the treaty does not neutralize UK CGT on a property situated in the UK.
For individuals who have left the UK but later return, the “temporary non‑residence” rules must also be watched. If a person was a UK resident for at least four of the seven years before their departure and returns within the following five years, certain gains realized during the period of absence on assets held before departure may become taxable again in the UK in the year of return. These rules can affect the planning of selling a UK property between two periods of residence.
International Taxation, Tax Treaties, and Double Taxation
An expatriate can be a tax resident of two countries in the same year. They may also have to pay tax in the UK on income already taxed in their country of residence. This is where bilateral tax treaties (Double Taxation Agreements, DTAs) come in.
Objectives and Functioning of Tax Treaties
DTAs have two main functions:
– avoid double taxation by providing credit or exemption mechanisms;
– allocate taxing rights between countries based on the nature of the income (salaries, pensions, dividends, property gains, etc.).
These treaties override domestic law in case of conflict, but they do not apply automatically: you often need to make a formal application to the relevant tax authority, provide a certificate of tax residence from the other state, and comply with the procedures of both the country of residence and the UK.
For an expatriate working in the UK but tax resident in another country, the tax treaty provides that the country of residence grants a tax credit equal to the tax already paid in the UK. This credit is limited to the amount of tax due on that same income in the country of residence. Thus, the final tax corresponds to the higher rate of the two countries, avoiding full double taxation.
Conflict of Residence and “Tie‑Breaker” Rules
When an individual is considered a tax resident of two countries under their domestic laws, treaties contain “tie‑breaker” rules that determine a single country of residence for the purposes of the treaty. These criteria examine successively:
– the location of the permanent home;
– the center of vital interests (where personal and economic ties are strongest);
– the country of habitual abode;
– nationality;
– failing that, a mutual agreement procedure between the tax authorities.
In practice, this mechanism is essential for expatriates whose lives are organized between the UK and another country (frequent returns, split families, multi-country work). It conditions access to certain treaty benefits, like the possibility to limit withholding tax on dividends or interest.
Limitations of Treaties for Property Gains
Most treaties follow the OECD model and leave the right to tax income derived from immovable property (including gains) to the country where the property is situated. A French expatriate in the UK selling a Paris apartment will normally be taxed on the gain in France, not in the UK – even if they remain a UK tax resident.
Conversely, an expatriate non‑resident in the UK but selling a house in England will generally not be able to invoke the treaty to escape UK CGT, even if they are taxed on the same sale in their country of residence. They will, however, most often be able to claim a foreign tax credit in that country for the tax paid in the UK.
Social Security and National Insurance: A Distinct but Related Topic
Pure taxation should not make you forget another essential aspect: social security. In the UK, social contributions are called National Insurance contributions (NIC) and fund, among other things, the State Pension.
Where to Pay Contributions? Basic Rules and Social Security Agreements
In principle, you pay social security contributions in the country where you work. However, for expatriates temporarily seconded or working in multiple countries, bilateral agreements or coordination regulations help avoid double contributions and allow the aggregation of contribution periods for pension entitlement purposes.
The UK has a wide network of social security agreements. To prove you remain affiliated with your home country’s scheme and be exempt from contributions in the other country, you must obtain a certificate of coverage. This is a ‘certificate of coverage’ or, for relations with the EEA and Switzerland, an A1 form.
For expatriates leaving the UK, it is possible, under certain conditions, to continue paying voluntary contributions (Class 2 or Class 3) to maintain or complete their entitlement to the State Pension. These contributions can often be paid to fill up to six tax years of “gaps” in the National Insurance record.
UK State Pension and Expatriation
Entitlement to the State Pension depends on the number of years of “qualifying” contributions:
| Element | Condition |
|---|---|
| Minimum entitlement to the new State Pension | 10 qualifying years of NIC |
| Entitlement to full State Pension | 35 qualifying years |
| Indicative weekly amount (full) | £221.20 (recent reference value) |
Time spent living or working in the EEA, Switzerland, Gibraltar, or a country with a social security agreement can be taken into account to reach the 10-year threshold, but will not affect the calculated amount, which is based solely on UK contributions.
For expatriates, the UK State Pension can be paid in most countries. Its amount is uprated each year if you reside in the European Economic Area (EEA), Switzerland, Gibraltar, or in a country with a specific agreement with the UK. If you reside in another country, your pension amount may remain frozen at the initial level and not benefit from these annual upratings.
Combining UK Tax and Residence Country Tax: Key Practical Questions
For an expatriate, the difficulty is not only to understand the UK rules in isolation, but to make them coexist with those of their host country. A few points deserve particular attention.
Non‑Resident Landlord Status and Local Taxation of Rent
An expatriate owning a property rented out in the UK is often still taxed in their country of residence on this rent, in addition to UK tax. Tax treaties generally provide that the country where the property is situated retains a taxing right, but the country of residence must grant a tax credit for the UK tax paid.
The typical process is therefore: the standardized process that guides the successive steps needed to complete a project, respecting deadlines and optimizing resources.
Rental income received in the UK is subject to UK income tax, reported either via the NRLS (Non-Resident Landlord Scheme) or via a Self Assessment tax return. This same income must also be declared in the owner’s country of residence. Tax paid in the UK can generally be credited against the tax due in the country of residence, up to the limit of the applicable local tax rate.
It is crucial to keep all documentation (NRLS withholding certificates, UK tax notices, proof of expenses) to claim this tax credit.
Sale of a UK Property: Timing and Tax Status
Planning the sale of a UK property must take into account:
– residency status at the time of disposal (resident vs non‑resident);
– the potential impact of the temporary non‑residence rules if a return to the UK is envisaged within five years;
– the applicable rebasing date (2015 for residential, 2019 for non‑residential);
– potential principal private residence exemptions (Private Residence Relief) if the property was used as a main residence at some point.
It is imperative to report a capital gain to HMRC within 60 days, even if it is covered by an exemption. Failure to comply with this obligation results in penalties, regardless of the final amount of tax due.
Personal Allowance for Non‑Residents
Many non‑residents are unaware that they can, in some cases, continue to benefit from the UK Personal Allowance on their UK-source income. This possibility is open to UK nationals, those from the EEA, certain former Crown servants, or residents of countries covered by a tax treaty that expressly provides for this benefit.
Obtaining this allowance requires an application (form R43 or section SA109 of the Self Assessment return) and can significantly reduce the tax due on UK rents or pensions, or even bring it to zero if the net income remains below the £12,570 threshold.
Conclusion: Interwoven Taxation, a Strategy to Build
The taxation of expatriates with ties to the UK – whether it’s income tax, Council Tax, Capital Gains Tax, or social security rules – constitutes a dense set of rules, where each financial decision (keeping a property, renting it, selling it, remaining affiliated with the State Pension, etc.) has multiple repercussions.
The key points to remember are: the essential and important information.
UK taxation for non-residents rests on several pillars: the annual determination of tax residency via the Statutory Residence Test, the distinction between income tax, Council Tax, and capital gains tax (CGT). The Non-Resident Landlord Scheme applies to rental income, with withholding tax or the possibility to receive rent gross. Property sales are subject to a shortened 60-day reporting deadline. Tax treaties avoid international double taxation but do not prevent the UK from taxing its real estate. Finally, new arrivals can benefit from advantageous regimes like Foreign Income and Gains and Overseas Workday Relief during their first years.
Faced with this complexity, combining a good understanding of general principles, rigorous documentation (travel, income, expenses) and, often, specialized professional advice, allows expatriates to build a coherent strategy that limits tax risks and optimizes the management of their UK-linked assets and income.
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Cyril Jarnias is an independent expert in international wealth management with over 20 years of experience. As an expatriate himself, he is dedicated to helping individuals and business leaders build, protect, and pass on their wealth with complete peace of mind.
On his website, cyriljarnias.com, he shares his expertise on international real estate, offshore company formation, and expatriation.
Thanks to his expertise, he offers sound advice to optimize his clients' wealth management. Cyril Jarnias is also recognized for his appearances in many prestigious media outlets such as BFM Business, les Français de l’étranger, Le Figaro, Les Echos, and Mieux vivre votre argent, where he shares his knowledge and know-how in wealth management.
