Leaving the UK: Tax Residency & HMRC Rules 2026

Last reviewed: 26 April 2026

Leaving the UK is one of the most consequential financial decisions a British national or long-term resident can make. Tax residency, domicile status, and source-based income rules do not disappear the moment your flight departs. HMRC's Statutory Residence Test -- the legal framework governing UK tax residence since 6 April 2013 -- continues to apply after departure, and its three-tier structure means simply buying a ticket abroad is rarely sufficient to break UK residence in the year you leave. This guide covers the full SRT framework, eight cases of split-year treatment, the P85 departure form, NT tax codes, double taxation treaty relief, the April 2025 shift from the remittance basis to the FIG regime, capital gains on departure, and ongoing UK tax obligations that frequently catch departing individuals by surprise: rental income, UK-source dividends, and IHT exposure.

How the Statutory Residence Test Works in 2026

HMRC codified the SRT in Finance Act 2013, Schedule 45. The test operates in strict sequence. If you meet any automatic overseas test, you are non-resident for the full tax year -- no further analysis required. If you fail all automatic overseas tests, the automatic UK tests are checked. Fail those too, and a sufficient-ties count determines your status based on how many of five UK connection factors you hold.

The three automatic overseas tests are: (1) UK-resident in at least one of the three preceding tax years but fewer than 16 days in the UK in the current year; (2) not UK-resident in any of the three preceding tax years and fewer than 46 days in the UK; (3) full-time overseas work averaging at least 35 hours per week, fewer than 91 UK days in the year, and no more than 30 UK work days. Full technical definitions are in HMRC RDR1.

The four automatic UK tests trigger residence regardless of overseas activity: 183 or more days in the UK; only home in the UK; dying in the UK having been UK-resident in each of the three preceding years; or full-time UK work for any 365-day period within the tax year.

If neither set of automatic tests applies, HMRC applies the sufficient-ties count. Five connection factors are assessed: family tie, accommodation tie, work tie (40 or more UK work days), the 90-day tie (90+ UK days in either of the two preceding years), and the country tie (UK is where most days are spent -- only applied to leavers). A leaver with one tie can spend up to 120 days in the UK without becoming resident; with four or five ties, only 15 days.

Split-Year Treatment: The Eight Cases

In the tax year of departure or arrival, an individual may qualify for split-year treatment under one of eight Cases in Schedule 45, Part 3. Split-year divides the year into a UK-resident part and an overseas part; foreign income arising in the overseas part is generally outside the scope of UK income tax, and UK CGT applies only to disposals in the UK part.

For most departing employees, Case 1 is the relevant test: full-time overseas work must begin within the tax year, the third automatic overseas test must be met in the following year, and both UK day counts and UK work day counts must remain within permitted limits for the part-year period. Case 3 covers those who cease to have any UK home. Cases 4 to 8 relate to arrivals. Split-year treatment does not apply automatically -- it must be claimed on your Self Assessment return. HMRC's technical guidance is in RDR3.

The P85 Form, NT Tax Codes, and HMRC Notification

Employees leaving the UK should submit form P85 to HMRC on or shortly after departure. The form notifies HMRC of your departure, enables HMRC to issue a final PAYE calculation, and can trigger an NT (nil rate) PAYE code where your employer will continue paying you UK-source employment income from an overseas posting. With an NT code, your employer deducts zero PAYE; you settle any residual liability via Self Assessment.

Self-employed individuals notify HMRC of departure via their final Self Assessment return, deregistering for Self Assessment if no UK-source income continues. Individuals with UK rental income must remain registered regardless of residence status.

For UK bank interest and savings income, HMRC may issue an R85 or equivalent to allow payment gross once non-residence is established, though banks may default to withholding until notified. For treaty relief on UK dividends and interest paid by UK companies, non-residents apply via the relevant DT Individual form.

Double Taxation Treaties and 2026/27 Thresholds

The UK maintains over 130 comprehensive double taxation agreements. Most follow the OECD Model, using a tiebreaker to determine treaty residence: permanent home, centre of vital interests, habitual abode, then nationality. A person who is UK-resident under the SRT but treaty non-resident claims relief on their Self Assessment return, citing the relevant treaty article. HMRC publishes all treaties at gov.uk/government/collections/tax-treaties.

Treaties assign taxing rights over categories of income -- employment income is typically taxed only in the country of work; dividends are split; pensions are generally taxed only in the country of residence (subject to the specific article). Treaties do not override the SRT -- they provide relief from double taxation once residence is established under domestic law.

The 2026/27 personal allowance is £12,570. Non-residents are entitled to the personal allowance only if a treaty provides for it or if s.56 ITA 2007 applies -- EEA nationals and nationals of treaty countries with a personal allowances article generally qualify; others do not. The basic rate band runs to £50,270; the higher rate to £125,140.

The FIG Regime: What Changed from April 2025

From 6 April 2025, the remittance basis and domicile-based income and CGT rules were replaced by the Foreign Income and Gains (FIG) regime. Individuals who have not been UK-resident in any of the preceding 10 tax years can elect, in each of their first four years of UK residence, to exclude foreign income and gains from UK tax entirely -- without needing to leave them offshore. This is a clean residence-based system; domicile is no longer the primary test for income tax or CGT (though IHT retains a transitional deemed-domicile structure until 2027).

For those leaving the UK, the FIG regime is relevant primarily on potential return. After 10 or more consecutive years of non-residence, a returning individual can claim a fresh 4-year FIG window. The IFS analysis of the 2025 non-dom reform notes that the FIG regime is broadly revenue-neutral compared with the remittance basis for shorter-term non-doms, but more favourable for those with very large offshore gains who were previously caught by remittance provisions.

A Temporary Repatriation Facility (TRF) applies transitionally: pre-April 2025 foreign income and gains previously sheltered under the remittance basis can be brought to the UK at 12% (2025/26) or 15% (2026/27). This facility closes after 2027/28.

Capital Gains Tax on Departure

Non-residents are generally outside UK CGT, with two significant exceptions. First, disposals of UK land and property (residential since April 2015; all UK property since April 2019) remain within UK CGT for non-residents and must be reported to HMRC within 60 days of completion via the UK Property Reporting Service, regardless of whether a taxable gain arises.

Second, the temporary non-residence rules in Schedule 45, Part 4 recapture gains realised abroad during a period of non-residence if that period is five years or fewer. A person who leaves the UK, realises gains on a non-UK portfolio during two years of non-residence, then returns within five years will be assessed on those gains in the year of return. The CGT annual exempt amount for 2026/27 is £3,000.

For expats moving to destinations with no capital gains tax -- such as the UAE or Singapore -- careful planning around the timing of asset disposals relative to the date of departure and the date of establishing treaty residence can significantly reduce CGT exposure. Our Moving to Dubai from UK 2026 guide covers the UAE position in detail.

Ongoing UK Tax Obligations After Leaving

Rental income from UK property remains taxable in the UK regardless of where you live. Non-resident landlords must register under the Non-Resident Landlord (NRL) Scheme. Letting agents deduct 20% basic rate tax at source unless HMRC has authorised gross payment. Allowable expenses include mortgage interest relief (capped at 20% basic rate under s.272A ITTOIA 2005 for residential property), management fees, repairs, and buildings insurance. Net profits are reported on a UK Self Assessment return.

UK-source dividends, interest, and pension income may remain within the UK tax net depending on the applicable treaty. The UK State Pension is typically taxable in your country of residence under most treaties. For the frozen vs uprated country distinction and QROPS options for workplace and private pensions, see our UK Pension Abroad 2026 guide.

Inheritance tax continues to apply to UK-situated assets regardless of domicile or residence. Under the transitional IHT deemed-domicile rules, individuals who were UK-domiciled are broadly treated as UK-domiciled for IHT purposes for up to 10 years after leaving -- the precise transition to the new residence-based IHT framework is being phased in through to 2027. Worldwide estate exposure should be reviewed with a specialist before departure. For banking considerations in your destination, see our Best Expat Bank Accounts UK 2026 guide.

This article is for general information only and does not constitute tax, legal, financial or immigration advice. Rules and rates change; verify with the primary sources cited or consult a qualified adviser before acting.

FAQ

How many days can I spend in the UK after leaving without becoming UK-resident again?

It depends on your UK connection ties. A leaver with no ties can spend up to 182 days. With one tie, the limit is 120 days; two ties, 90 days; three ties, 45 days; four or five ties, only 15 days. These limits apply once you have failed the automatic overseas tests for that year.

Do I need to submit a P85 form when leaving the UK?

Yes, if you are an employee. Form P85 notifies HMRC of departure, triggers a PAYE refund calculation, and can prompt an NT tax code for ongoing UK-source income. Self-employed individuals notify departure via their final Self Assessment return instead.

Does becoming non-resident cancel my UK CGT liability?

Not entirely. UK residential and commercial property remains within UK CGT for non-residents; any disposal must be reported within 60 days. The temporary non-residence rules also recapture gains realised abroad if you return to the UK within five tax years of leaving.

What is the FIG regime and does it affect someone leaving the UK?

The FIG regime from April 2025 replaced the remittance basis. It primarily benefits arrivals and returners, not those leaving. However, if you plan to return after 10 or more years of non-residence, you can claim a fresh 4-year FIG window, sheltering foreign income and gains from UK tax for that period.

Can I still claim the UK personal allowance as a non-resident in 2026/27?

Only where a double taxation treaty provides for it, or if s.56 ITA 2007 applies (broadly EEA nationals). The 2026/27 allowance is £12,570 for those who qualify. UK nationals living outside the EEA in a non-treaty country lose the allowance on becoming non-resident.

What happens to my UK rental income after I leave?

It remains fully taxable in the UK. You must register under the Non-Resident Landlord Scheme. Your letting agent deducts 20% basic rate tax at source unless HMRC authorises gross payment. Report net profits annually on a UK Self Assessment return, claiming allowable expenses including restricted mortgage interest relief at 20%.

Do I pay UK tax on my UK State Pension while living abroad?

Under most UK double taxation treaties, the State Pension is taxable only in your country of residence. Without a treaty, it is UK-taxable. Confirm your treaty position before assuming exemption. See our UK Pension Abroad 2026 guide for the full frozen vs uprated country breakdown.

How long does domicile affect my IHT position after leaving?

Under transitional rules, former UK-domiciliaries remain broadly within UK IHT on worldwide assets for up to 10 years after leaving. The new residence-based IHT framework is being phased in through 2027. UK-situated assets remain within UK IHT regardless of your domicile or residence status.

Sources

1. HMRC -- RDR1 Residence, Domicile and the Remittance Basis (verified 26 April 2026)
2. HMRC -- RDR3 Statutory Residence Test (verified 26 April 2026)
3. gov.uk -- Tax if you leave the UK to live abroad (verified 26 April 2026)
4. gov.uk -- Non-Resident Landlord Scheme guidance notes (verified 26 April 2026)
5. gov.uk -- UK Double Taxation Treaty Collection (verified 26 April 2026)
6. IFS -- Analysis of the 2025 Non-Dom Reform and FIG Regime (verified 26 April 2026)
7. DWP -- State Pension if you retire abroad (uprated country list) (verified 26 April 2026)