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TAX GUIDE · MOVING ABROAD

Moving from UK Tax Guide 2026: HMRC Split Year, CGT as Non-Resident & ISA Treatment

Daniel · CountryTaxCalc Updated April 2026
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KEY INSIGHT
The UK has no exit tax — there is no deemed disposal of worldwide assets when you leave. Your departure tax obligations are: (1) file a UK Self Assessment for the year of departure covering your UK residency period, (2) submit form SA109 (Residence, remittance basis etc.) to claim split year treatment, and (3) send HMRC form P85 to confirm your departure. You may continue to owe UK tax as a non-resident on UK-source income (rental income, dividends from UK companies) and on any UK residential property capital gains. ISAs become 'frozen' on departure — no new contributions but existing funds remain tax-free in the UK.
At a glance

Key Facts

HMRC Split Year Treatment: How It Works
UK tax law provides 'split year treatment' under the Statutory Residence Test (SRT) introduced in Finance Act 2013. When you leave the UK permanently (or for a full tax year), you can apply for split year treatment, which divides your departure year into: (1) UK resident period — January 1 to your departure date — taxed as a UK resident on worldwide income; (2) Non-resident period — departure date to April 5 — taxed only on UK-source income. Split year treatment is not automatic — you must claim it via HMRC form SA109 (Residence, remittance basis etc.) attached to your Self Assessment return. The SA109 asks you to identify which of the 8 'split year cases' applies to you. Case 1 (Starting full-time work overseas), Case 4 (Starting to have a home abroad), and Case 8 (Partner of someone starting full-time work overseas) are the most common for departing expats. UK tax year runs April 6 to April 5 — the split occurs at your actual departure date within that year. File your SA109 by January 31 following the end of the tax year of departure.
UK Statutory Residence Test: Confirming Non-Residency
Simply leaving the UK does not make you a non-resident — the SRT has specific rules. You become non-UK resident if: (1) Automatic non-resident: you spend fewer than 16 UK days in the tax year (if UK resident in all of the previous 3 years), or fewer than 46 UK days (if UK resident in 1 or 2 of the previous 3 years), or work full-time overseas (35+ hours/week average) with fewer than 91 UK days; OR (2) you pass the sufficient ties test — fewer days in the UK combined with fewer 'ties' (family tie, accommodation tie, work tie, 90-day tie, country tie). Key rule: if you have UK ties (family remaining in the UK, a home available to you in the UK), you need to spend fewer days in the UK to confirm non-residency. Temporary non-residence (fewer than 5 complete tax years abroad) has anti-avoidance provisions — certain income and gains arising after departure may be taxed in the UK if you return within 5 years. This is critical for those planning to realise gains while abroad and return.
CGT as a UK Non-Resident: The Rules That Catch People Out
The UK applies capital gains tax (CGT) to non-residents on: (1) UK residential property — all disposals of UK residential property by non-residents are subject to UK CGT, regardless of how long you have been non-resident. Non-Resident Capital Gains Tax (NRCGT) applies. Report within 60 days of completion (since April 2020) via HMRC's online service, even if no tax is due. (2) UK commercial property (since April 2019). (3) Interests in property-rich companies. For UK residential property sold while non-resident: main residence exemption still applies for the period of actual UK residence, but is prorated; after April 2015 (when NRCGT was introduced), the gain is calculated from April 5, 2015 or from acquisition date, whichever is later, for NRCGT purposes. Annual exempt amount: non-residents still get the CGT annual exempt amount (£3,000 for 2025/26). No deemed disposal: unlike Canada or Australia, the UK does not trigger CGT on departure itself — the gain is only realised on actual sale. UK equities and overseas property: no UK CGT as a non-resident.
ISAs on Departure: The 'Frozen' Rule
Individual Savings Accounts (ISAs — Cash ISA, Stocks and Shares ISA, Innovative Finance ISA, Lifetime ISA) are a cornerstone of UK savings. When you become a UK non-resident: you cannot make new contributions to your ISAs (HMRC rules limit ISA contributions to UK residents). Your existing ISA funds remain in the account — they are not closed or forced out. The tax-free status in the UK remains — your ISA investments continue to grow free of UK income tax and CGT within the ISA wrapper. However, your destination country may not recognise the ISA as tax-exempt. In the USA: ISAs are not covered by the UK-USA tax treaty. ISA income is US-taxable as regular investment income, and the ISA may need to be reported as a foreign grantor trust (potentially triggering Form 3520 and Form 3520-A US reporting obligations). In France: ISAs in most cases subject to French tax on income. Practical recommendation: review your ISA holdings before departure. If moving to the USA, withdrawing ISA funds before US residency and reinvesting in a US-efficient structure may simplify your tax position. Lifetime ISA: if under 60 and using for a first home, withdrawal conditions remain unchanged for non-residents.
UK State Pension and Voluntary NI Contributions
Your UK State Pension entitlement is based on National Insurance (NI) qualifying years — you need 35 qualifying years for the full New State Pension (£221.20/week for 2025/26). When you leave the UK and stop working: NI contributions stop accruing. If you have gaps, you can pay voluntary Class 3 NI contributions to fill gaps and protect your pension. Cost: voluntary Class 3 NI for 2025/26 = £17.45/week (£907.40/year). Return: each additional qualifying year adds approximately £6.32/week to your pension (£328.64/year). Break-even: approximately 2.76 years — i.e., if you live more than 2.76 years past State Pension age, paying voluntary NI is financially beneficial. You can currently fill gaps going back to 2006 (deadline for this extended window was previously April 5, 2025 — check HMRC for the current extended deadline). Check your NI record via Personal Tax Account (UK Government Gateway) before departure. UK State Pension is payable abroad — HMRC sends it internationally. Important: State Pension is frozen at the rate when you first claim it in some countries (no annual increases) — check if your destination country is on the UK's 'uprating' list. USA, Australia, and EU countries receive annual increases; Canada, New Zealand (outside EEA) receive frozen pension.
Introduction

The United Kingdom's departure rules are relatively straightforward compared to countries like Canada, Germany, or France — there is no UK exit tax, and the UK operates a clean 'split year treatment' that taxes you as a UK resident for the portion of the year before departure and a non-resident thereafter. However, 'no exit tax' does not mean 'no UK tax obligations after leaving.' The UK retains taxing rights on UK-source income and UK residential property gains indefinitely — obligations that catch many departed expats off guard. This guide covers the specific HMRC forms, the ISA situation, state pension planning, and the critical non-resident CGT rules that apply to former UK residents.

Section 01

Moving from UK to USA: Key Planning Points

UK-to-USA is one of the world's most common high-skilled migration corridors. Beyond the tax rules above, these UK-US specific points matter:

P85 form: Complete HMRC Form P85 (Getting your Income Tax right if you're leaving the UK) online via Government Gateway. This tells HMRC you are leaving and triggers a tax code review. If you are employed, your employer should also update your payroll. If self-employed, notify HMRC as part of your final Self Assessment.

UK pension to USA: If you have a UK defined contribution pension pot, you cannot transfer it to a US 401(k) or IRA (QROPS rules prevent this unless the receiving scheme is HMRC-recognised). Options: leave the pension in the UK (it remains invested, accessible at UK pension age — currently 57 from 2028); transfer to a QROPS in a third country. UK drawdown from the USA: 10% UK withholding under the UK-USA tax treaty on periodic pension income; claim as Foreign Tax Credit on your US return.

UK-USA dual filing year: In your year of departure, you are filing both a UK Self Assessment (April 6 to departure date as UK resident; then non-resident for rest of year) and a US Form 1040 for the portion after you become a US tax resident. Work with a cross-border tax advisor who understands both UK SA109 and US first-year residency elections (1040-NR vs 1040 with dual-status return).

Double Taxation Agreement: The UK-USA DTA is comprehensive. UK-source income (pension, rental, dividends) can generally be claimed as a Foreign Tax Credit on your US return. The tiebreaker clause determines which country has primary residency rights if you have connections to both.

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FAQ

Frequently Asked Questions

Do I need to file a UK tax return after leaving the UK?

Yes, for the tax year of departure you must file a UK Self Assessment return if you have any taxable income or gains in that year, or if you were in Self Assessment before. Attach SA109 to claim split year treatment. After departure, you continue to need to file UK Self Assessment if you have UK-source income (rental income, self-employment income from UK sources, or other UK-taxable income) or if you sell UK property. Non-residents with only UK PAYE employment income or bank interest may not need to file — HMRC manages this through PAYE and provides refunds or assessments automatically. File by January 31 for online returns (October 31 for paper). HMRC's non-resident page at gov.uk/tax-foreign-income/non-residents outlines the requirements.

What happens to my UK private pension when I move abroad?

UK personal and workplace pensions remain invested in the UK. You can access them from the UK pension access age (currently 55, rising to 57 in 2028) wherever you live. UK pension withdrawals as a non-resident: the first 25% lump sum may be tax-free in the UK (PCLS — Pension Commencement Lump Sum) depending on the treaty; ongoing drawdown is subject to UK income tax at source, reduced by the relevant DTA. In the USA: 10% withholding under UK-USA DTA on periodic income, 25% on lump sums unless treaty provides a lower rate. Transferring to a QROPS (Qualifying Recognised Overseas Pension Scheme): possible, but the 5-year overseas transfer charge (25% of the transfer value) was reintroduced in 2024 — this substantially changes the calculus. Generally, leaving a UK pension in situ and managing drawdown tax-efficiently via the DTA is the recommended approach for most expats.

I have a UK rental property — what are my obligations after I leave?

As a non-resident landlord, your UK rental income remains fully subject to UK income tax. You must register with HMRC as a non-resident landlord and either: (1) apply to receive rent gross (your tenant or letting agent pays you without deducting tax, and you pay tax via Self Assessment); or (2) have your letting agent deduct 20% tax at source before paying you (NRL Scheme — Non-Resident Landlord Scheme). Apply for gross payment status via HMRC NRL1 form. Your rental profit is calculated in the normal way (rent less allowable expenses). As a non-resident, the UK personal allowance may be available (if you are a UK national, EEA national, or treaty protected) — check HMRC's current guidance. CGT on eventual sale of the property: file a return within 60 days of completion. Keep records of all capital improvements (they increase your cost base).

Is there a 5-year anti-avoidance rule I need to know about?

Yes. The UK has temporary non-residence rules (section 809B ITTOIA 2005 and TCGA 1992 section 10A). If you are UK resident for at least 4 of the 7 tax years before departure and you spend fewer than 5 complete UK tax years abroad, certain income and gains realised while non-resident can be taxed in the UK in the year you return. This affects: chargeable gains on assets owned before departure (if gains arise while you are temporarily non-resident), income from pensions (if paid while temporarily non-resident and then return). The 5-year clock runs from April 6 in the tax year after departure to April 5 five years later. If you plan to realise large gains (e.g., selling a business) while abroad but intend to return to the UK within 5 years, take specific advice on the temporary non-residence rules before acting.

What happens to my Child Benefit and other UK benefits when I leave?

Child Benefit terminates when the child (or the claimant) is no longer ordinarily resident in the UK. Notify HMRC immediately on departure to stop payments — overpayments must be repaid. Universal Credit, Housing Benefit, Working Tax Credit: all require UK residency and habitual residence — terminate on departure. State benefits that continue as a non-resident: UK State Pension (payable worldwide, though frozen in some countries), and contributory benefits you have already qualified for. If moving to an EEA country or a country with a reciprocal agreement: some benefits continue under the agreement terms. The DWP (Department for Work and Pensions) has an international pension centre for queries about state pension payments abroad.
Disclaimer:This guide provides general tax information for educational purposes only. UK tax rules, HMRC forms, ISA rules, NI voluntary contribution rates, and CGT thresholds change with annual UK Budgets and Finance Acts. Nothing in this guide constitutes tax or legal advice. Consult a UK-qualified tax advisor (CIOT/ATT member) before departing the UK, and a cross-border specialist if moving to the USA or another country with a UK DTA.
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