What you owe in the United Kingdom depends on your tax residence status and on how many years you have already lived in the country, not on your nationality. Domicile stopped driving the taxation of income and gains on 6 April 2025, and on 6 April 2026 dividend rates and inheritance tax reliefs changed again. Below are the rates and thresholds in force for the 2026/27 tax year, together with the practical question of how to build an international tax strategy before the move rather than after the first letter from HMRC.
Who pays UK tax and on what
The scope of your liability is set by UK tax residence, not by your passport or the place where a company is registered. A UK tax resident is generally taxable on worldwide income and gains. A non-resident is taxable only on UK-source income — rent from a UK property, the profits of a permanent establishment, or gains on the disposal of UK land and property.
Residence is settled by a formal set of rules, the Statutory Residence Test. It has three parts, applied strictly in order: the automatic overseas tests, the automatic UK tests, and the sufficient ties test.
- Automatically non-resident — if you were resident in one or more of the three preceding years and spent fewer than 16 days in the UK; if you were not resident in any of the three preceding years and spent fewer than 46 days; or if you work full time overseas.
- Automatically UK resident — if you spend 183 days or more in the UK in the tax year; if the only-home test is met; or if you work full time in the UK.
- Sufficient ties test — where neither set of automatic tests gives an answer, day counts are read against five ties: family, accommodation, work, the 90-day tie and, for leavers, the country tie.
The UK tax year does not follow the calendar: it runs from 6 April to 5 April the following year, while a company may choose its own accounting reference date. A fuller breakdown of the day counts and ties sits on the tax residence test page, and the long-term view for wealthy families is covered under tax planning for high-net-worth individuals.
Income tax and dividend rates in 2026/27
Income tax is charged on a progressive scale. The personal allowance is £12,570 and is withdrawn by £1 for every £2 of adjusted net income above £100,000, so it is gone entirely at £125,140. Rates and thresholds are frozen until 5 April 2031, which means more income falls into the upper bands each year even though the rates themselves do not move.
| Income band (England and Northern Ireland) | Rate |
|---|---|
| Up to £12,570 — personal allowance | 0% |
| £12,571 – £50,270 — basic rate | 20% |
| £50,271 – £125,140 — higher rate | 40% |
| Above £125,140 — additional rate | 45% |
Dividends have their own scale, and the two lower rates rose by two percentage points on 6 April 2026: 10.75% within the basic rate band, 35.75% within the higher rate band and 39.35% at the additional rate. The dividend allowance is £500 a year. For an owner-manager drawing income as dividends this is a direct increase, and the familiar salary-versus-dividend split is worth recalculating. Current rates are published on GOV.UK.
Bank interest is taxed after the personal savings allowance: £1,000 for basic rate taxpayers, £500 for higher rate taxpayers and nil at the additional rate. Separate higher rates for savings and property income have been announced for 6 April 2027 — they are not yet in force for this tax year, but they belong in any planning around a rental portfolio. The full table of allowances sits on GOV.UK.
The FIG regime replaced non-dom status
The remittance basis, under which a non-domiciled resident paid UK tax on foreign income only when it was brought into the country, was abolished on 6 April 2025. In its place is the four-year foreign income and gains regime, a relief aimed at people who are only now becoming UK resident.
- You qualify if you were non-resident in the UK for at least 10 consecutive tax years immediately before becoming resident.
- The relief covers the first four years of UK residence, cannot be extended, and unused years are not carried forward.
- It applies to foreign income and gains: dividends, interest, profits of an overseas trade and income from letting property abroad.
- A claimant gives up the income tax personal allowance and the capital gains tax annual exempt amount.
- The claim is made through the tax return and can be made source by source rather than for everything at once.
For capital built up under the old regime there is a transitional route, the Temporary Repatriation Facility. It allows previously untaxed foreign income and gains to be designated at 12% in 2025/26 and 2026/27 and at 15% in 2027/28, and it closes on 5 April 2028. For employees working in the UK for an overseas employer, Overseas Workday Relief runs for up to four tax years and is capped at the lower of £300,000 or 30% of qualifying employment income. The eligibility conditions are set out in HMRC guidance.
Advantages of instructing Imperial & Legal on UK tax matters
- Assessment of residence status before the move, not after year one
- Calculation of the liability for each tax across your asset structure
- Eligibility check for the four-year FIG regime and a correct claim
- Preparation and filing of tax returns within statutory deadlines
- Handling of correspondence and enquiries raised by HMRC
- Co-ordination of UK and overseas reporting obligations
- Review of the strategy when residence, marriage or ownership changes
Corporation tax and other business taxes
A resident company pays corporation tax on its worldwide profits; a company is resident if it is incorporated in the UK or centrally managed from it. A non-resident company is taxable on the profits of a UK permanent establishment and on gains from UK property. There is no longer a single rate — since 2023 a two-tier scale applies, with marginal relief bridging the gap.
| Profits for the financial year | Corporation tax rate |
|---|---|
| Up to £50,000 — small profits rate | 19% |
| £50,000 – £250,000 — with marginal relief | 26.5% effective marginal rate |
| Above £250,000 — main rate | 25% |
Both limits are divided by the number of associated companies in the group and reduced proportionately for an accounting period shorter than a year — one of the most common reasons for an unexpected assessment. Profits from patented inventions may qualify for the Patent Box and an effective rate of 10%. The complete table is published on GOV.UK.
Dividends received by a UK holding company from subsidiaries at home or abroad are normally exempt from corporation tax where the conditions of the distribution exemption are met. The rules differ for small companies and for medium and large ones, and anti-avoidance provisions apply in both cases, so a holding structure is best reviewed before a distribution rather than after it.
Beyond corporation tax an employer pays national insurance: the secondary Class 1 rate is 15%, the secondary threshold is £5,000 a year, and the Employment Allowance for eligible employers is £10,500. A separate set of duties sits with Companies House: an annual confirmation statement, accounts within nine months of the year end, and identity verification for directors and people with significant control, a legal requirement since 18 November 2025. The day-to-day side is covered by accounting services, and the structural side by UK company registration.
VAT: rates, thresholds and digital reporting
The standard rate of VAT is 20%. The reduced rate of 5% applies to a limited list of goods and services, including domestic energy and children’s car seats. Most food, children’s clothing, books and exports are zero-rated. Separately, some supplies are exempt — insurance, financial services, postage stamps and certain property transactions — which is not the same as zero-rated, because input VAT on exempt supplies cannot be recovered.
Registration is compulsory once taxable turnover in any rolling 12-month period exceeds £90,000, or if you expect to pass that figure in the next 30 days. The deregistration threshold is £88,000. Voluntary registration below the threshold can make sense when your customers are themselves VAT registered and the business carries significant input tax. Current thresholds are listed on GOV.UK.
VAT reporting is digital only: Making Tax Digital applies to every VAT-registered business regardless of turnover. Records must be kept in functional compatible software and transferred by digital links, with no manual re-keying between spreadsheets. Exemptions are narrow and have to be agreed with HMRC in advance.
Capital gains tax
Capital gains tax is charged on the profit made when an asset is disposed of — shares, a stake in a business, a second property, an interest in a partnership. Separate residential property rates were removed on 6 April 2025: individuals now pay 18% within the basic rate band and 24% above it. The annual exempt amount is £3,000, and it is not available to anyone claiming the FIG regime.
| Situation | Rate for 2026/27 |
|---|---|
| Individual within the basic rate band | 18% |
| Individual above the basic rate band | 24% |
| Trustees and personal representatives | 24% |
| Business Asset Disposal Relief (from 6 April 2026) | 18%, £1m lifetime limit |
| Companies | gains form part of profits and are taxed at the corporation tax rate |
Property carries a separate obligation: a disposal of UK residential property must be reported and the tax paid within 60 days of completion, outside the ordinary return cycle. Non-residents must report every disposal of UK land and property, even where no tax is due. The 30-day deadline still quoted in many sources applied only to completions before 27 October 2021. The reporting procedure is set out on GOV.UK, and the transactional detail on the property taxes page.
Stamp Duty Land Tax on a property purchase
Stamp Duty Land Tax is paid once on the purchase of property or land in England and Northern Ireland and is charged on a sliding scale, with each rate applying only to its slice of the price. Scotland and Wales operate their own transaction taxes with different thresholds.
| 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% |
| Above £1,500,000 | 12% | 17% |
Worked example
On a purchase at £275,000 the duty is £3,750: nothing on the first £125,000, £2,500 on the next £125,000 and £1,250 on the remaining £25,000. If the property is not the buyer’s only dwelling, five percentage points are added to every band and the same purchase costs £17,500.
Buyers who are not UK resident for stamp duty purposes add a further two percentage points to every band, including the nil rate band. That surcharge can be reclaimed if the buyer later meets the day-count conditions for UK presence. Residential property above £500,000 bought by certain corporate bodies is charged at a flat 17% — raised from 15% on 31 October 2024 — with reliefs for property rental businesses, developers and several other trades. First-time buyers’ relief gives a nil rate up to £300,000 and 5% on the slice to £500,000, but is withdrawn entirely above £500,000. The official tables are on GOV.UK.
Tax advice and compliance
What an Imperial & Legal tax adviser works on
Establishing your tax status
Residence assessed under the SRT and an eligibility check for the FIG regime.
Planning before the move
A review of assets and income streams while the arrival date still leaves options.
Returns and reporting
Self Assessment, 60-day property returns and corporate filing obligations.
Succession and asset transfer
Inheritance tax exposure assessed and wills drafted around the outcome.
Inheritance tax and long-term residence
Inheritance tax is charged at 40% on the part of an estate above the nil-rate band. The nil-rate band is £325,000 and is frozen until 5 April 2031. A residence nil-rate band of £175,000 is available where the main home passes to direct descendants; it is reduced by £1 for every £2 by which the estate exceeds £2,000,000. Any unused proportion of both bands transfers to a surviving spouse or civil partner, so a couple passing a home to their children may have up to £1,000,000 free of tax. Where at least 10% of the net estate is left to charity, the rate falls to 36%.
The decisive change concerns whose worldwide assets fall within the charge. Since 6 April 2025 domicile has been replaced by a residence test: worldwide assets are in scope for anyone who has been UK resident for at least 10 of the previous 20 tax years. After leaving the UK the exposure continues for a further 3 to 10 years, depending on how many years of residence had accumulated. For anyone below that threshold, only UK-situated assets are charged.
- Nil-rate band £325,000, frozen to 5 April 2031; rate 40%, or 36% with a 10% charitable legacy.
- Residence nil-rate band £175,000 for a main home passing to direct descendants, tapered from £2,000,000.
- Long-term resident test: 10 years of residence out of the previous 20, followed by a tail of 3 to 10 years.
- From 6 April 2026 agricultural and business property relief is capped at £2.5m at the 100% rate, with 50% relief above it, and the unused allowance passes to a spouse.
- Shares that are not listed on a recognised exchange, including AIM shares, attract 50% relief in all circumstances.
- From 6 April 2027 unused pension funds will form part of the estate for inheritance tax.
The long-term residence test is explained in GOV.UK guidance, while the practical side — wills, trusts and ownership structures — is covered on the wills and inheritance page.
What to check before moving to the UK and during year one
- Calculation of the residence start date and the day count for the year
- Eligibility for the four-year FIG regime and the date it expires
- An inventory of foreign income and assets held on the arrival date
- Realisation of gains before the status changes, where that is cheaper
- Ownership of property: personally, jointly or through a company
- Years remaining until the long-term resident inheritance tax test
- Double taxation agreements between the UK and the previous country
Filing deadlines and Making Tax Digital
A personal Self Assessment tax return is required where income has not been taxed at source: self-employment income above £1,000, rental income, foreign income, dividends and interest above the allowances, capital gains, and UK income received by a non-resident. Registration for the first time is due by 5 October following the end of the tax year.
- Paper return for 2025/26 — by 31 October 2026.
- Online return for 2025/26 — by 31 January 2027.
- Balancing payment of tax — by 31 January 2027.
- Payments on account — 31 January and 31 July.
- A £100 penalty applies immediately after the deadline, then £10 a day after three months and further penalties at 6 and 12 months.
Making Tax Digital for Income Tax took effect on 6 April 2026. Digital records and quarterly updates are compulsory for sole traders and landlords with qualifying income above £50,000, measured on the 2024/25 return. The threshold falls to £30,000 in April 2027 and to £20,000 in April 2028. The eligibility conditions are set out in HMRC guidance, and the filing dates on GOV.UK.
How work with a tax adviser is structured
The work is not a form filled in each January. It starts with an assessment of status and continues as an annual review, because the position shifts with every additional year of residence, every change in the asset base and every change in family circumstances. What follows is the usual route through tax optimisation and advice.
Assessment of tax status and current obligations
Modelling the liability and choosing a strategy
Preparing and filing returns with HMRC
Support with transactions and company obligations
Annual review and succession planning
Situations that come up most often
The following situations account for most tax enquiries. Each has a clear answer when it is addressed before the event rather than after it.
- Relocating while keeping an overseas business. An entrepreneur moves to the UK and continues to draw income from a company in the former country. The key question is eligibility for the four-year FIG regime and how the claim is made for each source.
- Selling foreign property in the year of the move. The completion date relative to the start of residence decides whether a UK capital gains charge arises at all, and at what level.
- A non-resident buying a first home in London. Two percentage points are added to the standard scale, and five more if another dwelling is owned anywhere in the world; the total can differ several times over.
- Income arising in several countries. UK rules have to be read against the relevant double taxation agreements to establish where each stream is declared and where credit is due.
- Approaching the tenth year of residence. Worldwide assets come into the inheritance tax net, and the ownership structure is best revisited before that point.
Client stories on tax matters
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...
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 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...
A comparable situation arose for a couple from Austria who moved to be near family while selling one home and buying another. This is how they described it themselves.
For sure, at our age, moving to another country is like a natural disaster. But after considering everything, we decided to move closer to Hannah's sister who lives in the UK. It was only later that we realised how many issues we had to handle — selling our old house, purchasing a new one, and dealing with taxes! We had no idea how to do it all properly, so we were grateful that Imperial & Legal assisted us.
The mistakes that cost the most
Most assessments and penalties come not from elaborate structures but from a handful of ordinary errors. Every one of them is fixable in advance and almost impossible to fix afterwards.
- Relying on superseded rules. There is still more published material about non-dom status and the remittance basis than about the FIG regime, although the old regime ended on 6 April 2025.
- Counting days approximately. The residence test turns on exact figures — 16, 46, 90 and 183 days. No travel log is the most common cause of a dispute with HMRC.
- Missing the 60-day property return. The duty arises independently of the annual return, and interest accrues from the first day it is late.
- Overlooking associated companies. Corporation tax limits are divided between connected companies, so the small profits rate can stop applying without warning.
- Assuming domicile still governs inheritance tax. Years of residence are what count now, and the tenth year arrives sooner than most people expect.
- Leaving planning until late January. Most of the decisions that matter — the choice of regime, the timing of a disposal, the ownership structure — only work before the event.
Key takeaways
- Liability follows UK tax residence under the SRT, not nationality.
- The FIG regime replaced non-dom status: four years after ten years abroad.
- Income tax is 20/40/45%; dividends from 6 April 2026 are 10.75/35.75/39.35%.
- Corporation tax is 19% and 25%, with a 26.5% effective marginal rate.
- Capital gains tax is 18% and 24%, with 60-day reporting on property.
- Inheritance tax is 40% above £325,000, worldwide after ten years of residence.
- The online return for 2025/26 is due by 31 January 2027.
The British tax system is neither the simplest nor the heaviest in Europe, but it is built so that most of the advantage goes to those who settled their position before the move or before the transaction. Once the event has happened the range of available answers narrows and the cost of an error rises — from a late filing penalty to the loss of a four-year relief that cannot be claimed retrospectively.
This page is for general information and does not replace individual advice: the rates and thresholds shown are those in force for the 2026/27 tax year, and how each rule applies depends on the particular facts. Below are the questions that come up most often at a first meeting.
