From notifying HMRC to ensure a ‘clean break’, to reassessing the tax treatment of your savings and investments, maintaining National Insurance contributions to secure a state pension, and understanding the tax rules in your destination country, there are several key financial considerations to address before you relocate.
A growing number of Britons are choosing to leave the UK in search of better financial and lifestyle opportunities, as a combination of tax pressures, economic uncertainty and shifting labour market dynamics reshape long-term planning decisions.
The number of British nationals emigrating has remained broadly stable, with around 246,000 leaving the UK in the year to December 2025, slightly down from 257,000 the previous year, according to statics released by the ONS today. However, fewer Britons are returning, with immigration falling from 140,000 in 2024 to 110,000 in 2025. As a result, negative net migration has widened, with around 136,000 more people leaving than arriving.
This trend is most pronounced among younger adults. While emigration among those aged 16-34 has remained relatively steady, the number returning to the UK has fallen sharply, pushing the net outflow in this group to around 75,000. The gap has widened each year since 2022, suggesting that younger Britons, particularly workers and students, are staying abroad for longer.
David Little, Financial Planning Partner at Evelyn Partners, said:
“Frozen income tax thresholds, a rising tax burden, political uncertainty, higher living costs and an increasingly uncertain jobs market amid the AI boom are just some of the factors encouraging more Britons to consider a new life altogether, one that involves leaving their home and relocating to another country, typically with a lower tax regime.
“Moving overseas for a different life is not a new concept, but the numbers exiting the UK have risen in recent years in the face of multiple challenges, particularly among younger people, who may feel the grass is greener elsewhere.”
“Moving your life, and your finances, can be complicated, and if you want to relocate your business as well, there are even more hurdles. This is why people need to do their research before they consider a major relocation abroad to ensure they have taken the right steps and don’t get hit with a tax surprise.”
From tax residency rules to pension access, investment structures and cross-border business considerations, here Little outlines the key financial considerations for individuals, retirees and business owners before making the big move:
First, notify HMRC when you leave
You must inform HM Revenue & Customs that you are relocating outside the UK. This involves completing and submitting the appropriate forms (Form P85), which confirms you have left, or are about to leave the UK for tax purposes. Importantly, this can trigger a tax refund if you leave partway through a tax year. When you make a claim, you’ll need your P45.
You can also tell HMRC you are leaving through your Self-Assessment tax return, if you typically complete one. Simply complete the residence section on Form SA109 and send it alongside your return.
In addition to HMRC, it is important to inform other relevant bodies and service providers of your departure. This includes notifying your local council to ensure you are no longer liable for council tax, arranging for your post to be redirected and contacting utility providers, such as electricity, gas, water, broadband and mobile, to close accounts and settle any outstanding balances. You should also notify the Student Loans Company of your new employer or address, as it could result in debt collection otherwise.
Next, get to grips with your tax residency
Alerting HMRC you are leaving the country or have left the country is one thing, but your tax position hinges on whether you pass the Statutory Residence Test (SRT).
This considers the number of days spent in the UK alongside factors such as your work ties, living arrangements and family connections. Ultimately, simply ‘moving abroad’ is not enough – you must properly break UK residency. This is important as it determines how your income, savings and investments are taxed – not just in the UK but also in your new home country.
This is where researching any double taxation treaties between the UK and your new home nation is key. Doing so will help you understand your obligations and avoid any unexpected tax bills.
How long you stay away matters more than you realise
To determine your UK tax status, it’s not just how long you stay away, but also how ‘clean’ the break is that matters. A short-term move abroad carries a high risk of continued UK tax residence, particularly in the year of departure.
This is because the SRT tests apply to the entire tax year, not just the date you leave. To be treated as non-resident, you must either meet one of the automatic overseas tests or sufficiently limit your UK ties.
For example, if you were a UK resident in one or more of the previous three tax years, you must spend fewer than 16 days in the UK to be automatically non-resident. For leavers, this is often impractical in the year of departure.
The most reliable route to non-residence is working full-time overseas. Broadly, this means spending less than 91 days in the UK or working in the UK on no more than 30 days and sustaining this pattern over a complete tax year.
If you don’t clearly break residence, you fall into the sufficient ties test, where even a moderate UK connection, such as a home, work, family or the number of days spent in the country can keep you resident for tax purposes, something that is often overlooked.
Split-year treatment can help to secure non-residency
In some cases, the tax year can be split into UK and non-UK portions, taxing only UK income before departure. Take note, however, that this is not automatic, and conditions must be met.
Generally, split-year only applies in specific cases, such as taking on full-time work abroad or ceasing to have a UK home. Fail to get this right, and you will remain a UK tax resident for the whole financial year.
This is why short departures often fail to qualify, meaning full-year UK residence continues, because they either don’t satisfy full-time overseas work requirements, the individual maintains strong UK ties, they return too frequently or the move does not last long enough to create a clean break.
Scenarios include:
Scenario One – Six-Month Secondment (High Risk)
Harry leaves the UK in October for a six-month assignment in Dubai. He keeps his UK home, and it is available to him to use. His wife remains in the UK, and he returns for several visits – 40 days in total.
Outcome: Harry is likely to remain a UK tax resident for the entire tax year because he fails the full-time work abroad test, and he has multiple ties to the UK.
Scenario Two – Two-Year Relocation (Lower Risk)
Imogen relocates to Singapore for a two-year role starting in April. She sells her UK home, works full-time overseas and limits her UK visits to 24 days per year.
Outcome: Imogen not only meets the full-time work abroad test, but she qualifies for split-year treatment and becomes non-UK resident from her date of departure. A long, structured move makes her residence break much easier.
Scenario Three – ‘In Between’ Move (Common Trap)
Peter leaves the UK in June intending to stay abroad ’for a while’. He has no clear employment structure, keeps his UK property for occasional use and spends 70 days in the UK over the year.
Outcome: Peter does not meet the automatic overseas tests and as he retains at least two to three UK ties, he falls into the sufficient ties test and is likely to remain a UK resident. A lack of planning coupled with moderate UK presence can lead to ongoing residence risk and a UK tax bill.
Scenario Four: Frequent Flyer Executive (Common Trap)
Emma moves to Europe for work but spends 80 days in the UK annually to see her husband. She continues to keep a UK home and undertake UK duties.
Outcome: Emma is likely to exceed her UK workday limits and as she retains her strong UK ties, she may remain a UK tax resident despite living abroad
Ultimately, it’s not just where you live, it’s how you operate and in practice, breaking UK tax residence is rarely achieved through short-term moves. The Statutory Residence Test rewards a clear and sustained departure – both in time and in substance. The longer and cleaner the break, the lower the risk of ongoing UK tax exposure.
Moving abroad does not eliminate your UK tax obligations
Any UK-sourced income, such as rental income on a property, pensions, and some investment income, may still be taxable in the UK even if you live abroad. While your Personal Allowance will remain intact if you are subject to UK tax, any income above that level will be taxable.
Where you move to, and any Double Taxation Agreements (DTAs) that apply, will determine where tax is ultimately paid. DTAs – bilateral agreements between the UK and more than 130 countries across the globe, are designed to prevent individuals and companies from being taxed twice on the same income. Do your research as the tax treatment of UK [savings and] investments varies widely by country.
Your UK ‘tax‑free’ wrappers may not stay tax‑free overseas
Many UK tax-efficient wrappers, such as ISAs, lose their advantages abroad, and local tax rules can significantly change how and when income and gains are taxed. Income and gains that are tax‑free in the UK may be fully taxable overseas, sometimes annually on an accrual basis rather than when money is withdrawn.
In Spain, for example, ISAs and offshore bonds lose tax advantages, with income, gains and even underlying investments potentially taxed annually via a wealth tax.
Meanwhile, Australia often taxes offshore investments on an accrual basis, ISAs aren’t recognised and some pensions may be taxed unfavourably. So, it is very important to get to grips with the tax rules that will apply to your UK income and assets before you move abroad as this can significantly change the expected tax outcome and requires review before you move.
Capital Gains Tax (CGT) traps can apply
Selling assets shortly before or after leaving the UK can be problematic. If you return to the UK within five tax years, gains realised while abroad may still be taxed under temporary non‑residence rules.
Voluntary National Insurance Contributions – the rules have changed, which may impact your state pension
For those considering a return to the UK or intending to draw the State Pension in the future, the number of qualifying National Insurance Contribution (NIC) years accrued will be a key determinant of entitlement. Individuals typically require at least 10 qualifying years of NICs to receive any State Pension, and 35 years to qualify for the full new State Pension. Importantly, these years do not need to be consecutive.
Historically, expatriates could maintain their NIC record while living overseas through relatively low-cost Class 2 voluntary contributions. However, the rules were tightened in the Autumn Budget last year.
From April this year, access to Class 2 voluntary NI contributions for individuals residing overseas has been withdrawn. This route had been the most cost-effective way for expats to preserve their contribution record and build UK State Pension entitlements, with Class 2 costing £3.65 a week this tax year compared to £18.40 for Class 3 – a difference of several hundred pounds over the course of the year and potentially adding thousands of pounds to the overall cost of securing a full or partial State Pension.
Alongside higher costs, eligibility criteria have also been tightened. Individuals must now have at least 10 years of UK contributions or have lived in the UK for at least 10 consecutive years to even qualify to make voluntary payments to top up their NIC record while abroad.
As a result, those who leave the UK earlier in their careers, and long-term expatriates, could find themselves unable to fill gaps in their contribution history – ultimately affecting their future UK State Pension entitlement.
With eligibility narrowing at the same time that costs have risen, anyone considering a move overseas should assess their pension options carefully. The State Pension remains a key source of income for retirees, so making sure you can still build up an entitlement to this benefit could be crucial in your retirement.
Retirees have additional considerations – for starters, pensions are taxed differently depending on type
The UK State Pension is fully taxable in many countries. Another consideration is that some countries are not compatible with the inflation linking of the UK State Pension – these include Australia, Canada, New Zealand, South Africa, India, Thailand, most of Asia, Africa, South America and the Middle East.
Private and occupational pensions may be taxed in the UK or overseas depending on treaty rules, so Double Tax Treaties are key here.
Where you relocate to matters enormously for retirees
While some countries offer favourable pension tax regimes, flat tax schemes or exemptions for foreign income, not all do.
Access to good healthcare and a requirement for mandatory health insurance are other key considerations. As you age, your healthcare needs may increase, so will you be fully covered?
The cost of living in the country you move to can directly impact how well you live in retirement. Some destinations are much more affordable than others – a pension income may stretch much further in Thailand, for example, than it would do in Europe.
Inheritance tax (IHT) exposure may remain
Many retirees assume moving abroad removes UK IHT exposure, but often it does not. From April 6, 2025, UK IHT switched from a domicile‑based system to a long-term UK residence test. Your exposure now depends on how many years you have been UK tax resident, not where you consider ‘home’.
As an example, John lived in the UK for most of his life and built up significant assets but decided to retire to Spain in April 2025. He assumed that by leaving the UK, his estate would fall outside the scope of UK IHT.
However, under the new rules introduced from 6 April 2025, this is not the case.
John had been UK tax resident for 18 of the previous 20 tax years before leaving. As a result, he is classed as a ‘long-term UK resident’ for IHT purposes.
This means, even though he now lives permanently in Spain, his worldwide estate remains within the scope of UK IHT. This continues for up to 10 years after leaving the UK, depending on his prior residence history.
So, if John were to die in 2028, his UK and overseas assets (including property, investments, and pensions from 2027 onwards) would still be assessed for UK IHT. His estate could face 40% IHT on values above the available thresholds.
Business owners need to take extra care when relocating
Key considerations include:
- Company residency versus personal residency
Even if you move abroad, your company could remain UK‑tax resident based on where it’s managed and controlled. This is where board decisions and strategic control are critical.
Company residency is key here, as it is determined by where it is centrally managed and controlled, not simply where the shareholders or directors live. This matters because HMRC looks at where key strategic decisions are actually made, such as business strategy, major contracts or financing decisions.
If those decisions are still effectively made in the UK, with board meetings held here, and key directors remaining UK-based or decisions informally made here before being ‘rubber-stamped’ overseas, then the company is likely to remain UK tax resident. This means the company remains subject to UK corporation tax on its worldwide profits, it may also remain within the scope of UK anti-avoidance rules and any expected tax advantages from relocating may not materialise.
- Exit taxes and restructuring
Transferring a business overseas can trigger CGT, corporation tax, or stamp duty. If restructuring involves transferring shares in a UK company or selling shares to a new overseas holding company, for example, this can trigger Stamp Duty (0.5%) on share transfers (paper transfers), or Stamp Duty Reserve Tax (0.5%) on electronic transactions.
- Permanent Establishment risk
Operating overseas may create a taxable presence in another country, even without a formal company there. This can lead to complexities such as dual filing and unexpected foreign tax bills.
- Dividend, salary, and withholding tax issues
How you extract income from your business may need to change post‑move. Local withholding taxes and treaties matter.
- Selling a business free of UK CGT when abroad
Details and rules greatly matter here, so do not assume you understand the regulations and seek advice to ensure you get it right. If you return to the UK within five tax years, gains realised while abroad may still be taxed as if you never left the UK under temporary non‑residence rules.
Ultimately, financial planning is key for all
Timing and advice are everything when it comes to relocating to another country. Poorly planned moves can result in double taxation, lost reliefs or HMRC challenges.
Seeking professional advice before you leave is usually far more valuable than advice after the fact.
