There is no classic exit tax in the United Kingdom — no one-off charge on a deemed sale of everything you own at the moment you leave — and the Budget of 2025 did not introduce one, despite intense speculation in the autumn of that year. That does not mean departure is tax-free. Some obligations follow you after your residence ends, and others surface later — sometimes several years later. This page sets out what actually happens to your UK taxes when you cease to be a UK resident, and how to prepare for it well in advance.
Is there a UK exit tax when you leave the country
No. Unlike Canada, Australia or Germany, UK legislation contains no mechanism that deems an individual to dispose of their assets at the moment tax residence ends. You are not required to notionally sell a portfolio, a shareholding or overseas property and pay tax on the unrealised gain simply because you are moving abroad.
In international practice the term exit tax, or departure tax, means precisely that construction: when a person severs their tax link with a country, the state treats their assets as sold at market value and taxes the difference between that value and the acquisition cost. The purpose is to stop gains accumulated during years of tax residence from being carried into a jurisdiction with a lower or nil rate.
Throughout the autumn of 2025 the introduction of such a charge was widely discussed in the professional press, but it did not appear in the final package of measures published on 26 November 2025. That is no guarantee the idea will not return. UK tax policy towards wealthy residents has been moving quickly — the domicile-based system was abolished on 6 April 2025 and replaced by the FIG regime. Sensible planning therefore assumes the rules may change rather than treating today’s position as settled.
What exists instead of a single exit charge is a set of narrower rules, each capable of producing an unexpected liability. They fall into four groups: the rules that fix the date your residence ends, split year treatment, the five-year rule for temporary non-residents, and the obligations that continue on UK assets and for inheritance tax. Those four groups are what departure tax planning actually consists of.
Before any of these rules can be applied to a real situation, you need to know precisely when you stopped being a UK tax resident. That is not the date you booked a flight or the day you flew — it is the outcome of a statutory test.
How to establish when your UK tax residence ends
UK tax residence is determined by the Statutory Residence Test (SRT), in legislation since 2013. The test has three layers applied in order: the automatic overseas tests, the automatic UK tests and the sufficient ties test.
The automatic overseas tests
According to GOV.UK guidance, you are usually not a UK resident if one of the following applies:
- you spent fewer than 16 days in the UK during the tax year;
- you spent fewer than 46 days and were not a UK resident in any of the three previous tax years;
- you worked abroad full-time, averaging at least 35 hours a week, spent fewer than 91 days in the UK and no more than 30 of those were working days.
For someone leaving after several years in the country, the first and third conditions are the ones that matter. The 16-day threshold is unforgiving: one extra trip for a family funeral or to sign a deal can undo the calculation for an entire year.
The sufficient ties test
If no automatic test is met, the sufficient ties test applies. It weighs the number of days spent in the country against the number of connections you retain. There are five ties: family, accommodation, work, the 90-day tie and the country tie. According to the RDR3 guidance note, the country tie applies only to leavers — those who were resident in at least one of the three previous tax years.
| Days spent in the UK in the tax year | Number of ties that make you UK resident |
|---|---|
| 16 to 45 | 4 or more |
| 46 to 90 | 3 or more |
| 91 to 120 | 2 or more |
| over 120 | 1 or more |
The practical conclusion is straightforward: the more ties you keep — a house left behind, a spouse or minor children in the UK, work for a UK employer — the fewer days you can afford to spend in the country. Working through a specific combination of ties and days is covered in more detail on the page about tax residency in the UK.
Split year treatment when you leave the UK
The UK tax year runs from 6 April to 5 April, and as a general rule you are either resident for the whole of it or non-resident for the whole of it. Split year treatment is the exception: it divides the year of departure into a UK part and an overseas part, so that income and gains arising after you leave fall outside the UK net.
According to HMRC guidance, there are eight sets of circumstances in which the treatment applies. Three of them — Cases 1 to 3 — cover people going overseas part way through the year; the remaining five cover arrivers. For leavers the three are starting full-time work abroad, accompanying a partner who does so, and ceasing to have a home in the UK.
Case 3 is the most common route for those who are not leaving on an employment contract. Under the conditions set out by HMRC, you must be UK resident in the year of departure and in the previous year, non-resident in the following tax year, and at some point in the year cease to have any home in the UK for the rest of it. After that you must spend fewer than 16 days in the UK and, within six months, either become tax resident in another country, or be present in that country at the end of each day, or have all your homes there.
The treatment is not automatic — it has to be claimed on your return. That is precisely why the date of departure and the date you ceased to have a UK home need documentary support: a tenancy agreement, a completion statement, the day the keys were handed over.
Advantages of taking advice on a change of UK tax residence
- Assessment of eligibility for split year treatment
- Calculation of permitted days of presence in the UK
- Review of assets and potential taxable events
- Preparation of reporting for the year of departure
- Analysis of the consequences of a future return
- Alignment of UK rules with those of the destination country
- Support with UK asset disposals after departure
Which assets and income stay in the UK tax net
A change of residence takes foreign income and gains on foreign assets out of the UK net. A number of items, however, remain within it wherever you live, and those items are what the real tax burden of departure consists of.
UK property and land
Non-residents pay capital gains tax on disposals of any UK property and land. Under HMRC rules, a report is required even where no tax is due or a loss has been made, and the deadline is 60 days from completion for disposals completed on or after 27 October 2021. The rules have applied since 6 April 2015 and cover residential property, non-residential property and land, as well as indirect disposals — interests of 25% or more in companies deriving at least 75% of their value from UK land.
Sixty days is a short window. In practice it means the tax work has to be organised before you go to market, not after the money arrives.
UK-source income
Rental income from UK property, profits from a UK trade and income from duties performed in the UK remain within the UK net after you leave. A double taxation agreement with your new country of residence may help, but it needs to be applied deliberately and with the right evidence of status.
The rates that apply
According to GOV.UK, from 6 April 2026 capital gains tax for individuals is 18% on gains within the basic income tax band and 24% above it; higher and additional rate taxpayers pay 24% on the whole gain. The annual exempt amount is £3,000 and the Business Asset Disposal Relief rate is 18%. Income tax thresholds remain frozen: a personal allowance of £12,570 and a higher rate threshold of £50,270.
Individual savings accounts
One detail is often overlooked. Under GOV.UK rules, you cannot pay into an ISA once you cease to be a UK resident, but the account stays open and keeps its tax advantages. You must tell your provider that your status has changed; if you return and become resident again, the ability to subscribe resumes within the annual allowance.
Temporary non-residence: why five years matter
This rule is the closest thing the UK has to an exit tax, only deferred. It charges nothing when you leave, but brings back into charge what you realised while abroad if you return too soon.
According to helpsheet HS278, the rule applies if you had sole UK residence in at least four of the seven tax years before departure, were away for no more than five years, and then returned. Gains on assets acquired before departure and sold during the absence are then chargeable in the year of return, regardless of which year of absence the disposal actually fell in. Gains on assets bought while abroad are outside the rule, except where they are linked to pre-departure holdings through rollover relief or no-gain-no-loss transfers.
From 6 April 2026 the rule reaches further. According to the official description of the measure, the post departure trade profits provisions have been removed from the temporary non-residence rules: all distributions and dividends from UK close companies received during a period of temporary non-residence are now chargeable to UK income tax. The change applies to individuals returning to the UK on or after 6 April 2026. Where tax has been paid on the same distribution in the country of residence, relief is available provided it is not already given under a double taxation agreement.
The practical consequence is that selling a shareholding or drawing dividends from a UK company two years after departure is not protected from UK tax if you intend to return within five complete tax years. What has to be planned is not the date of the transaction but the horizon of the whole absence.
What to check before your UK tax residence comes to an end
- Date and documentary evidence of ceasing to have a UK home
- Day counting and the ties that remain with the UK
- Review of assets carrying unrealised capital gains
- Return horizon measured against the five-year threshold
- Status of UK companies, trusts and ownership structures
- Inheritance tax exposure in the years after departure
- Destination country rules and treaty relief procedure
The last item on that list deserves separate attention, because inheritance tax is the one UK obligation that can persist for years after you have formally become non-resident.
Inheritance tax after you leave: the long-term residence test
Since 6 April 2025 UK inheritance tax has been linked not to domicile but to the length of tax residence. Under GOV.UK guidance, you are a long-term UK resident if you have been UK tax resident for ten consecutive years or for ten years within the previous twenty. That status brings your worldwide estate within the scope of UK inheritance tax, not merely your UK assets.
The point that matters most for departure planning is that the status does not fall away when you leave. It continues for up to ten tax years after residence ends, and the length of that tail depends on how long you lived in the country: three years for ten to thirteen years of residence, four years for fourteen, five years for fifteen, and so on. For anyone who was deemed domiciled on 30 October 2024, the tail is three years.
The inheritance tax rate is 40% on the value above the nil-rate band of £325,000, and the threshold can rise to £500,000 where a home passes to children or grandchildren. Across the worldwide assets of a wealthy family, the difference between a three-year and a ten-year tail is measured in substantial sums, which is why establishing the date the long-term resident status ends is a standard part of international tax and estate planning.
| Years of UK residence | Years the status continues after departure |
|---|---|
| 10 to 13 years | 3 years |
| 14 years | 4 years |
| 15 years | 5 years |
| 20 years | up to 10 years |
Scope, timescales and cost of support when you leave
Departure tax work is not a single service but a sequence spread over time: part of it before you go, part in the year of departure and part in the years that follow. The table below sets out a typical scope and indicative timescales. Fees are quoted individually after an initial consultation and depend on the number of jurisdictions involved, the composition of assets and the presence of companies and trusts.
| Stage of work | What it covers | Indicative timescale |
|---|---|---|
| Initial assessment | Review of the situation, residence status check, map of risks | 1–2 weeks |
| Modelling the outcome | Asset review, scenarios for departure and for a possible return | 2–4 weeks |
| Preparing the departure | Fixing the date, home documentation, sequencing of disposals | 1–3 months |
| Reporting for the year of departure | Notifying HMRC, claiming split year treatment, filing the return | 3–6 months |
| Ongoing support | UK asset disposals, day counting, preparing for a return | Annually |
HMRC must be notified of the departure in any event. According to GOV.UK guidance, if you do not normally complete a Self Assessment return you fill in form P85; if you do, the residence details go on form SA109, which must be sent by post, and in that case the filing deadline is 31 October. The procedure itself is covered on the page about the self-assessment tax return.
Leaving the United Kingdom
Support with a change of UK tax residence
Residence status assessment
Review against the statutory test and calculation of permitted days in the UK
Planning of asset disposals
Establishing the right timing for disposals before or after the change of status
Reporting for the year of departure
Notifying HMRC, claiming split year treatment and filing the annual return
Alignment of two jurisdictions
Applying treaty relief and the rules of the new country of residence
Five stages of preparing to change tax residence
In practice the preparation falls into five consecutive stages, from the first consultation to ongoing support as a non-resident. Each stage below sets out what happens, what Imperial & Legal does and what is required from the client.
Consultation and review of the tax profile
Modelling the tax outcome across assets
Preparing the departure and fixing the date
Reporting for the year of departure to HMRC
Ongoing support while you are non-resident
The fifth stage runs long for a reason: it is where the consequences of the decisions taken in the first four actually play out. A further layer of risk is added by the country you are moving to.
Where you are going: exit taxes in other countries
The absence of a UK exit tax does not mean there is none anywhere on your route. If you were tax resident elsewhere before the UK, or are moving to a jurisdiction with its own departure rules, a deemed disposal may be triggered there. Where two countries with exit charges are involved, the same profit can also come to the attention of two tax authorities.
| Jurisdiction | What happens when tax residence ends |
|---|---|
| United Kingdom | No general exit tax. What applies is the temporary non-residence rule, capital gains tax on UK land and the inheritance tax tail |
| Canada | Deemed disposition of certain property at fair market value on departure. Where property exceeds CAD 25,000 in value, form T1161 is required (CRA) |
| Australia | CGT event I1: assets are treated as disposed of at market value, other than taxable Australian property. A choice to defer the gain is available (ATO) |
| Germany | Gains on substantial shareholdings may be taxed on emigration under section 6 of the Aussensteuergesetz. The conditions depend on the size of the holding and the length of residence |
Specific thresholds, rates and exemptions in each of these jurisdictions change and need to be verified as at the date of the intended move — the table shows the principle rather than a finished calculation. It matters just as much to understand how the destination country will tax the income you receive after the move, and whether a double taxation agreement with the United Kingdom is in force.
Common mistakes when leaving the United Kingdom
Most problems on a change of residence come not from complex structures but from simple oversights in dates and paperwork. These are the ones that recur most often.
- Leaving without formalising the departure. Without notifying HMRC and claiming split year treatment, the whole year may be treated as resident, with all that follows for foreign income.
- Counting days approximately. The 16-day and 46-day thresholds have no margin. Transit stops, days of arrival and departure and business visits are all counted under the statutory rules rather than by impression.
- Keeping the house just in case. A UK home available to you creates a tie and may close off split year treatment under Case 3.
- Selling the business two years after leaving. If you return within five complete tax years, the gain falls back into charge in the year of return.
- Forgetting the sixty days. A UK property disposal must be reported within the deadline whether or not any tax is payable.
- Assuming inheritance tax leaves with residence. Long-term resident status continues for several years after departure.
- Planning only the UK side. The rules of the destination country can change the overall picture entirely.
What this looks like in practice
The three scenarios below are composites, but they reflect accurately the situations clients most often bring when planning a departure.
A UK company owner ahead of a share sale
An entrepreneur has lived in the UK for twelve years, plans to move to the UAE and to sell his shareholding in a UK company eighteen months after leaving. The key questions are whether the temporary non-residence rule catches him, what the realistic horizon of absence is, and how the date of the sale sits against the end of the five-year period. The inheritance tax tail is assessed separately: at twelve years of residence, long-term resident status continues for three years.
A family keeping a house in London
A couple are moving to Portugal but do not want to sell their house, intending to let it instead. Split year treatment under Case 3 is unavailable here, so eligibility under Case 1 or the outcome of the sufficient ties test is examined instead. The rental income remains within the UK net, and any future sale of the house will require a report within the sixty-day deadline.
A former remittance basis user
A client used the previous remittance basis for many years and, after the 2025 reform, decides to leave. The review covers whether any transitional opportunities remain unused — the temporary repatriation facility available for three tax years from 2025 to 2026 at rates of 12%, 12% and 15% — and how rebasing of foreign assets to their value on 5 April 2017 will affect the gain on a future disposal.
Behind each of these scenarios are real clients who worked through a change of tax residence and the reporting and planning questions that came with it.
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...
Tax planning for married couple moving to England to settle (Indefinite Leave to Remain)
Tobias and Hannah moved to the UK from Austria. The couple received a pre-settled status, which is granted to EU citizens, permitting them to relocate...
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....
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...
One of those clients described what proved hardest of all when moving country and selling the home they were leaving behind.
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.
How to approach leaving the UK with a clear head
Leaving the United Kingdom is not a single event but a sequence of decisions stretched across several years: the year before departure, the year of departure and the whole period of non-residence. The absence of a single exit charge makes that sequence less visible, but no less consequential — liabilities arise later, attached to particular disposals and dates, and almost always where they were not expected.
The most vulnerable point is the year of departure itself. That is where the date of the change of status is fixed, where split year treatment is claimed and where the logic of every later calculation is set. A mistake there is the most expensive one, because it usually cannot be corrected after the event.
Key takeaways
- There is no general UK exit tax, and the Budget of 2025 did not introduce one.
- The date residence ends is set by the statutory test, not by the date you fly.
- Split year treatment is not automatic — it has to be claimed on your return.
- Returning within five complete tax years brings gains back into UK charge.
- From 6 April 2026 all UK close company dividends fall within that rule.
- UK property disposals are reportable within 60 days even after you leave.
- Long-term resident status for inheritance tax lasts three to ten years.
This page is for information only and is not individual tax or legal advice: whether each of the rules described applies depends on your particular circumstances. Below are answers to the questions that come up most often when preparing to leave.
