Tax optimisation in the UK is a sequence of lawful decisions taken in advance: when you become a tax resident, in what order you bring assets into the country, in whose name property and business are held, and which reliefs you use during your first years here. The reform that took effect on 6 April 2025 removed the link to domicile and replaced it with rules based on length of residence — so decisions that could once be made as you went along now come with firm deadlines.
Below is how the system works in the 2026/27 tax year, which rates and thresholds apply now, what has already been announced for 2027 and 2028, and which steps are worth taking before the next relief window closes.
What lawful tax optimisation in the UK actually means
Lawful optimisation means using rules the legislation provides for: preferential regimes, deductions, exemptions, the choice of ownership structure and the timing of a transaction. It has nothing to do with concealing income or with artificial arrangements: HMRC has both general anti-abuse rules and a disclosure regime, and attempting to outplay the system costs more than the tax saved.
In practice, almost everything that works comes down to four things: establishing your tax status correctly, choosing how assets are held, spreading income and gains across tax years, and claiming time-limited reliefs while they are still available. What the work on a tax position typically covers:
- establishing tax status under the residence test and identifying which income falls within UK tax;
- reviewing the existing ownership structure of assets and business against current legislation;
- planning the order and timing of bringing offshore funds in, selling assets and distributing dividends;
- choosing how foreign income and gains are taxed during the first years of residence;
- preparing and filing tax returns, including the Self Assessment tax return;
- assessing the tax consequences of a property transaction before contracts are exchanged, not after;
- planning the transfer of capital to the next generation under the inheritance tax rules.
The practical conclusion is that planning belongs before the taxable event, not after it. And any such work starts with one question — whether you are a UK tax resident at all.
Who pays UK tax, and on which income
A UK tax liability depends on residence status, which is determined by a formal test — the Statutory Residence Test. It leaves no room for a personal impression of how long you have been here: the test consists of the automatic overseas tests, the automatic UK tests and the sufficient ties test, applied in a strict order and separately for each tax year. The official guidance is published on GOV.UK as RDR3.
The UK tax year runs from 6 April to 5 April. A UK resident is, as a general rule, taxable on worldwide income; a non-resident is taxable only on UK-source income, including income from UK property. It is also worth keeping in mind that tax residence and immigration status are different things: you can be a tax resident without a long-term UK visa, and hold a visa without being tax resident.
The ties the sufficient ties test looks at are accommodation, family, work in the UK, the number of days spent here in previous years and where you spend most of your time. The more ties you have, the fewer days are enough to make you resident. A detailed walkthrough with day-count examples is on our page about the UK tax residence test.
What to establish before the year begins
- the planned number of days in the UK and in other countries;
- the date from which accommodation becomes available to you here;
- the timing of any offshore asset sale relative to becoming resident;
- whether there is an employment contract, and where the work is actually performed.
What changed when non-dom status was abolished
Until 6 April 2025, the taxation of foreign income for wealthy arrivals was built on domicile and on the remittance basis: foreign income was not taxed in the UK until it was brought into the country. That regime has gone. Since 6 April 2025 the system is based on length of residence — and this applies to income tax and capital gains tax as much as to inheritance tax.
| Question | Before 6 April 2025 | From 6 April 2025 |
|---|---|---|
| Basis for taxing foreign income | Domicile and the remittance basis | Length of UK tax residence |
| Relief for new residents | Remittance basis with an annual charge after 7 years | FIG regime: first 4 years after 10 years of non-residence |
| Bringing in income earned earlier | Taxed at normal rates on remittance | Reduced TRF rate: 12% in 2025/26 and 2026/27, 15% in 2027/28 |
| Inheritance tax on foreign assets | Domicile and deemed domicile | Long-term resident test: 10 years out of the last 20 |
The practical effect of the reform is that reliefs became shorter and more precise. Planning used to be something you could spread over years; now the key decisions sit within the first four years of residence, while the consequences of a mistake in inheritance planning can follow you for up to ten years after you leave. HMRC’s explanation of the move to a residence-based system for inheritance tax is set out in its guidance for long-term UK residents.
Key takeaways
- the remittance basis no longer applies to income arising on or after 6 April 2025;
- the main relief for new residents is the four-year FIG regime;
- for income and gains arising before 6 April 2025 there is a temporary repatriation window;
- inheritance planning is now counted in years of residence, not in domicile status.
Your first four years here: what the FIG regime gives you
The four-year foreign income and gains (FIG) regime is the principal relief for anyone who has just arrived. It is available to someone who became a UK tax resident after at least ten consecutive years of non-residence and is still within their first four years of residence. Where the relief is claimed, qualifying foreign income and gains are not taxed in the UK, and those funds can be brought into the country without a further charge.
One feature matters a great deal: the regime does not apply automatically. It has to be claimed on the tax return for each year separately, and the claim comes at a price — for any year claimed you lose the personal allowance for income tax and the annual exempt amount for capital gains tax. So the calculation is done afresh in each of the four years: where there is little foreign income in a given year, not claiming can produce the better result. The eligibility conditions are set out in HMRC’s guidance on the four-year FIG regime.
A second tool sits alongside it — Overseas Workday Relief. From 6 April 2025 it is available to the same new residents over the same four-year period, capped at the lower of 30% of qualifying employment income or £300,000 a year. Separately there is the Temporary Repatriation Facility: those who previously used the remittance basis can bring in foreign income and gains that arose before 6 April 2025 at 12% for 2025/26 and 2026/27, and 15% for 2027/28. After that, the window closes.
A full walkthrough of the new regime and how the claim is made is on our page about the UK FIG regime. Deciding whether to claim in a particular year normally needs the figures for all four years side by side.
What tax planning support on relocation covers
- Assessment of tax status under the residence test
- Year-by-year calculation of the benefit of a FIG claim
- Planning the order in which funds are brought in
- Preparation of an ownership structure for offshore assets
- Review of eligibility for Overseas Workday Relief
- Assessment of the temporary repatriation window
- Preparation and filing of tax returns
What happens after the relief period ends — or in a year when no claim is made — depends on the rates that then apply to your income.
The rates that shape your liability in 2026/27
Without the current rates and thresholds, planning is guesswork. Below are the main figures for the 2026/27 tax year for England, Wales and Northern Ireland. Scotland sets its own rates and band limits for employment and other non-savings, non-dividend income, so Scottish residents should work from the Scottish rates.
| Band of income | Rate |
|---|---|
| Up to £12,570 — personal allowance | 0% |
| £12,571 – £50,270 | 20% |
| £50,271 – £125,140 | 40% |
| Over £125,140 | 45% |
The personal allowance begins to taper once adjusted net income exceeds £100,000: it reduces by £1 for every £2 of the excess and disappears entirely at £125,140. The effective marginal rate in that corridor is higher than the headline 40% — one of the classic points where moving part of the income into another year, or making a pension contribution, changes the outcome. The current figures are published on GOV.UK; the personal allowance and the higher-rate threshold are frozen until 5 April 2031.
| Type of income | Rate for 2026/27 | Allowance |
|---|---|---|
| Dividends, ordinary rate | 10.75% | £500 a year |
| Dividends, upper rate | 35.75% | £500 a year |
| Dividends, additional rate | 39.35% | £500 a year |
| Capital gains, basic rate taxpayers | 18% | £3,000 a year |
| Capital gains, higher and additional rate taxpayers | 24% | £3,000 a year |
| Savings income | 20% / 40% / 45% | up to £1,000 at the basic rate |
Dividend rates rose by 2 percentage points on 6 April 2026 — the ordinary rate from 8.75% to 10.75% and the upper rate from 33.75% to 35.75%, while the additional rate stayed at 39.35%. This is confirmed by HMRC, which also sets out the next change: from 6 April 2027 the rates on savings income and on property income rise by the same 2 percentage points, to 22%, 42% and 47%. For landlords and holders of substantial deposits, that makes 2026/27 the last year at current rates.
National Insurance for employees is charged at 8% between £12,570 and £50,270 a year and 2% above that; the employer rate is 15% on earnings above £5,000 a year. Separately, from 6 April 2026 carried interest is taken out of the capital gains tax regime and taxed within income tax. Business Asset Disposal Relief carries a rate of 18% for disposals from 6 April 2026, with a lifetime limit of £1,000,000 per person.
Tax on buying and holding UK property
Residential transactions are the area where the cost of a mistake shows up immediately: stamp duty is calculated at the point of purchase and depends on who is buying, how many dwellings the buyer already owns and whether the buyer is UK resident. The rates in force since 1 April 2025 are below; the surcharges are cumulative.
| Portion of the price | Standard rate | With the additional dwelling surcharge |
|---|---|---|
| Up to £125,000 | 0% | 5% |
| £125,001 – £250,000 | 2% | 7% |
| £250,001 – £925,000 | 5% | 10% |
| £925,001 – £1,500,000 | 10% | 15% |
| Over £1,500,000 | 12% | 17% |
- the additional dwelling surcharge is 5 percentage points and applies where the dwelling costs £40,000 or more;
- the surcharge for non-UK resident buyers is a further 2 percentage points on top of all other rates;
- a purchase of a dwelling over £500,000 by a company or other non-natural person is charged at a flat 17% unless a relief applies;
- first-time buyers pay nothing up to £300,000 and 5% on the portion from £300,001 to £500,000, but the relief is lost entirely if the price exceeds £500,000.
The bands in force are published on GOV.UK, and the additional dwelling surcharge has its own guidance page. It is also worth remembering that Multiple Dwellings Relief was abolished for transactions completing on or after 1 June 2024 — calculations based on the old approach now produce an underpayment and a penalty.
Where residential property worth more than £500,000 is held by a company, a partnership with a corporate member or a collective investment scheme, an annual charge — ATED — arises. It is payable whether or not the property produces income, and the return is due by 30 April for the relevant chargeable period.
| Property value | Annual charge |
|---|---|
| £500,001 – £1,000,000 | £4,600 |
| £1,000,001 – £2,000,000 | £9,450 |
| £2,000,001 – £5,000,000 | £32,200 |
| £5,000,001 – £10,000,000 | £75,450 |
| £10,000,001 – £20,000,000 | £151,450 |
| Over £20,000,000 | £303,450 |
ATED is not, however, a verdict against corporate ownership: the legislation provides reliefs, including for a property rental business letting commercially to an unconnected party, for property developers and for property traders. A relief does not apply by itself — a separate relief declaration return is filed within the same deadlines. The grounds are listed in HMRC’s guidance on ATED reliefs and exemptions. Non-residents selling UK property must report and pay capital gains tax within 60 days of completion — even where no tax is due.
On top of this comes an already announced surcharge on high-value homes in England: from April 2028 properties worth £2 million or more attract an annual charge of between £2,500 and £7,500 depending on the value band. For anyone buying a substantial property now, that is a further element in the cost of ownership. Related questions are covered on our pages about property in the United Kingdom and mortgages and bridging loans.
Support on a property transaction from the tax side
- Calculation of stamp duty including all surcharges
- Review of eligibility for first-time buyer relief
- Choice of ownership: personal, company or trust
- Assessment of ATED liability and grounds for relief
- Planning a sale around capital gains tax
- Compliance with the 60-day deadline for non-residents
- Cost of ownership modelled over several years
Business tax and how the company is owned
For companies, the UK system remains comparatively simple: the main rate of corporation tax is 25% on profits above £250,000, the small profits rate is 19% on profits up to £50,000, and marginal relief smooths the transition in between. The figures are confirmed in HMRC’s rates and allowances table. The standard rate of VAT is 20%, and registration becomes compulsory once taxable turnover exceeds £90,000.
The optimisation work here has less to do with the rate than with the structure. The usual questions are how to split profit between salary and dividends now that dividend rates have risen; whether to introduce a holding company between the owner and the trading business; which jurisdiction should hold intellectual property; and how a UK company sits within an international group without creating double taxation. Related services include UK company registration, accounting services and management of intellectual property.
A separate topic is non-resident companies holding UK property: since 6 April 2020 their income from that property has been within the charge to corporation tax rather than income tax, which changes both the calculation and the filing obligations. Owners of a family business should look at the structure not only through the lens of current profit but with the eventual transfer in mind — the subject of our page on restructuring a family business.
Inheritance and passing capital to the next generation
Inheritance tax in the UK is charged at 40% on the value of an estate above the nil-rate threshold. The basic nil-rate band is £325,000; a residence nil-rate band of £175,000 is available in addition where a home passes to direct descendants. That additional band tapers for larger estates: it reduces by £1 for every £2 of estate value above £2 million. Where 10% or more of the net value of the estate is left to charity, a reduced rate of 36% applies. All three figures are frozen until 5 April 2031.
Since 6 April 2025, foreign assets fall within UK inheritance tax by reference to residence rather than domicile: the estate of someone who has been a UK tax resident for at least 10 of the last 20 years is within the charge. The obligation does not fall away the moment you leave, either — a tail of between 3 and 10 years applies, depending on how many years of residence were accumulated. The rules are set out in HMRC’s manual at IHTM47020.
Two changes matter for anyone with a business or pension savings. First, from 6 April 2026 the 100% relief for business and agricultural property is capped at £2.5 million per person, with relief at 50% on value above that; any unused allowance transfers to a surviving spouse or civil partner, giving a couple up to £5 million. Second, from 6 April 2027 unused pension funds and most death benefits are brought into the estate. Both changes shift the emphasis onto lifetime decisions — succession planning is worth starting before a move, not after it.
Tax planning
Let us look at your tax position with real figures
Status diagnosis
Residence position calculated year by year, and a list of income within the UK charge.
Reliefs modelled by year
A comparison of claiming and not claiming the FIG regime for each of the first four years.
Ownership structure
How property, business and offshore assets are best held in your circumstances.
Filing and deadlines
Returns prepared, reliefs claimed and every deadline tracked for each tax.
Even where the scope of work is clear, the route through it depends on the detail: how many years you have already been resident, where the assets sit and when a major transaction is planned. Here is how the work itself is usually structured.
How tax planning work is structured
The order of the steps barely changes with the size of the estate: status and the asset picture are established first, options are then modelled, and only after that is anything put in place. Below is the typical sequence from the first enquiry through to long-term support.
Consultation and assessment of tax status
Preparing a strategy for income and assets
Putting the ownership structure in place
Filing the return and claiming reliefs
Reviewing the plan as status changes
One question comes up more often than any other: how this differs from simply having a return prepared. The difference is that planning changes the amount of tax, while a return only records what has already happened.
Why clients bring tax planning to Imperial & Legal
- Liability modelled on real figures rather than general rules
- Review of ownership structures against the 2025 reform
- Control of the deadlines by which reliefs can still be claimed
- Support on property transactions before contracts are exchanged
- Preparation of returns and correspondence with HMRC
- Tax and immigration decisions aligned with each other
- Planning the transfer of capital under the residence rules
For that modelling to be useful rather than approximate, it helps to arrive at the first meeting with the data already assembled.
Which documents and data you will need
The accuracy of the calculation depends directly on how complete the source data is. Below is the minimum set that supports meaningful conclusions at the first consultation. Some of it will not be needed if the position is simpler than the typical case.
On status and presence
- passports and visa pages, including previous visas;
- a day-count record for the UK and other countries over recent years;
- tenancy agreements or title documents for accommodation available in the UK;
- the employment contract and details of where the work is actually performed.
On income and assets
- income statements for recent tax years in every country;
- bank statements separating funds accumulated before and after becoming resident;
- property documents: purchase contracts, valuations, details of any letting;
- business documents: ownership structure, accounts, contracts with key counterparties;
- details of pension savings, including overseas schemes;
- details of existing trusts, and of who the settlor and beneficiaries are.
If documents are missing for one of these points, that is useful information in itself: gaps in evidencing the source of funds are often the real obstacle rather than the tax.
Practical examples from real situations
Below are three typical situations that show how planning works. The figures are illustrative and are there to show the logic; an actual calculation always depends on the detail.
Selling an offshore asset in the first year of residence
An entrepreneur moves to the UK in June and plans to sell a shareholding in an overseas company in the same tax year. If the sale completes after residence begins and the FIG regime is not claimed, the gain falls within UK capital gains tax at 24%. If the sale completes before residence begins, or the year is closed with the relief claimed, the outcome is entirely different. Claiming the relief also removes the personal allowances for that same year — which is why the decision is made on the numbers rather than by default.
Buying the family home through a company
A family is considering a £3 million house and wants to hold it through an offshore company. On that route, stamp duty is charged at the flat 17% rate applying to dwellings over £500,000, and ATED then arises each year — £32,200 for the 2026/27 period in that value band. Personal ownership costs less in running charges but looks different from an inheritance tax perspective. The choice follows a comparison of both calculations over the intended period of ownership.
Dividends from your own UK company
An owner-manager is used to taking profit as dividends. Since the rates rose on 6 April 2026, a distribution taxed at the upper rate now bears 35.75%, and the balance between salary, dividends and pension contributions changes. This is not a one-off decision but an annual recalculation, taking account of the £100,000 threshold at which the personal allowance starts to disappear.
Situations like these come up regularly in practice — below are several real client stories describing what was actually done.
Client stories on tax planning
Tax planning for married couple relocating to UK
Madina and Yuri are a married couple from Kazakhstan. They relocated to the United Kingdom a year ago when Yuri was invited to join a project to develop educational computer games. He agreed right...
Tax planning for a foreign person when moving and buying a property in England
Pablo is originally from South America. He has been living in Britain for several years. His business involves supplying construction equipment to...
Tax planning in England for a client with an investor visa
Andy is a long-standing client of Imperial & Legal. We helped him to obtain a UK investor visa and settle in London. He is originally from South Africa, but he changes locations quite often to...
English tax return for a client with an Innovator visa
Santiago came to the UK from Costa Rica. We knew him from when he applied for his Innovator's visa to the UK. Imperial & Legal helped him to put together the necessary documents and...
Tax Returns for Client Who Applies for Indefinite Leave to Remain
Anna relocated to the United Kingdom from New Zealand. She had been happy there with her husband Frederik. He had had a successful automobile business....
One of these clients explained why he decided not to work through the UK tax rules on his own.
As an experienced businessman, I believe that if there is an opportunity to optimise your expenses, you should take it! When I moved to the UK, I immediately became interested in legal ways to reduce my tax burden, but I decided to entrust the solution to this issue to professionals, so I turned to Imperial & Legal again. The specialists of the company did everything at the highest level!
Doing it yourself, an accountant, or a tax adviser
The difference between these options is not price but the question each of them answers. An accountant records correctly what has already happened; a tax adviser works on decisions that have not been taken yet. Below is a comparison across typical tasks.
| Task | Yourself | Accountant | Tax adviser |
|---|---|---|---|
| Filing the annual return | Feasible with simple income | Yes | Yes |
| Establishing residence under the test | High risk of error | Sometimes | Yes |
| Modelling relief claims year by year | No | Rarely | Yes |
| Choosing an ownership structure | No | No | Yes |
| Tax review of a transaction before signing | No | No | Yes |
| Planning the transfer of capital | No | No | Yes |
A practical rule of thumb: if all your income is UK-based and fits into one return, separate planning is usually unnecessary. If there are offshore assets, property, your own business, or a substantial transaction in prospect, modelling it beforehand almost always costs less than correcting the consequences afterwards.
Where the boundaries sit
- a legal requirement — filing the return and claiming any relief within the deadline;
- good practice — documenting the source of funds and keeping separate accounts for separate streams;
- an adviser’s recommendation — revisiting the plan as the residence thresholds approach.
The mistakes that prove expensive
Most problems arise not from aggressive arrangements but from missed deadlines and decisions taken without a calculation. These are the ones seen most often in practice.
- Planning on abolished rules. Working from domicile and the remittance basis after 6 April 2025 misstates the whole liability.
- An unclaimed relief. The four-year regime and Overseas Workday Relief are claimed on the return for a particular year and cannot be claimed retrospectively.
- Mixing funds in one account. Where money accumulated before and after becoming resident sits together, evidencing the composition of a remittance becomes difficult.
- Holding a home through a company without modelling it. The flat rate of stamp duty and the annual ATED charge often outweigh the benefit of corporate ownership.
- Missing the 60-day deadline. Non-residents must report a disposal of UK property within 60 days, even where no tax is payable.
- No inheritance plan. The 10-of-20-years threshold arrives quietly, and after leaving the country the exposure continues for a further 3 to 10 years.
- Using the wrong rate table. Scottish residents pay under their own rates, and the general UK table does not apply to them.
Some deadlines are particularly easy to overlook: the ATED return is due by 30 April for the chargeable period, the 12% temporary repatriation rate closes after 2026/27, and from 6 April 2027 the rates on property and savings income rise by 2 percentage points. Each of those dates is a reason to revisit the plan early.
Where to start in your own situation
If you are still planning a move, the most valuable decisions are taken before you become a UK tax resident: the order in which assets are sold, the point at which residence begins and how ownership is arranged. If you are already resident, everything is counted in years — what matters is knowing which year the four-year relief period ends in, and when the ten-year inheritance tax threshold comes into view. If you already own UK property or a business, start with a review of how it is held: that is what drives both the running charges and the tax on transfer.
The material on this page is for information only and is not individual tax or legal advice: the rules apply to particular circumstances, and the outcome depends on the detail of your situation.
Key takeaways
- the main tax decisions for new residents sit within the first four years;
- reliefs are claimed on the return and cannot be carried back to earlier years;
- how property and business are held affects the liability more than the rates do;
- inheritance planning is counted in years of residence, including 3–10 years after leaving;
- the next dates to plan around are 6 April 2027 and April 2028.
