United Kingdom: personal tax guide

What the tax system covers

UK residents are ordinarily taxed on worldwide income and gains. The former remittance-basis system ended for new income and gains from 6 April 2025; eligible arrivals may instead claim the four-year foreign income and gains regime.

When you become tax resident

The Statutory Residence Test uses automatic overseas tests, automatic UK tests and sufficient ties. It applies to the 6 April–5 April tax year. A day count below 183 does not itself establish nonresidence; work, homes, prior residence and family connections affect the outcome.

Rates and the tax base

20%–45% ordinary bands; Scottish top rate 48%. England, Wales and Northern Ireland use 20%, 40% and 45% ordinary bands above allowances. Scottish non-savings, non-dividend income has a separate scale up to 48%. Allowance withdrawal, National Insurance and dividend rates require separate calculations.

Private investment gains and business trading

Individuals can owe capital gains tax on disposals of chargeable investments above available allowances. The main 2026/27 rates are 18% and 24%, depending on income and gains. Reliefs, tax wrappers, asset type and residence change the result; a business’s trading receipts are considered under income-tax rules.

Asset cost basis on arrival

For ordinary taxable gains, arrival in the UK does not generally reset an asset’s acquisition cost. The original cost and allowable adjustments remain relevant, even when the purchase preceded UK residence.

• Finance Act 2025 Schedule 11 permits 5 April 2017 rebasing for qualifying former remittance-basis users and qualifying assets. That is a conditional historic-date rebase, not an arrival-date rule.
• The conditions include ownership on 5 April 2017, a qualifying remittance-basis claim, domicile restrictions and the asset-location period; review the enacted text and any election.
• A claimed foreign-income-and-gains exemption and a change in tax basis are different mechanisms.

Residence and the year of arrival or departure

Apply the automatic overseas tests before the automatic UK and sufficient-ties tests. For example, the low-day automatic overseas test generally permits fewer than 16 UK days for someone resident in at least one of the preceding three tax years, compared with fewer than 46 days where none of those years was resident. Other tests contain their own requirements; these thresholds are not universal travel allowances.

A year with 183 UK days is automatically resident. At lower day counts, the home, work and ties tests remain relevant. Split-year treatment applies only to prescribed cases, rather than automatically on the flight date. Record days, UK workdays, homes and the preceding residence years before deciding when an income receipt or disposal falls within UK taxation.

Ordinary income: bands and the allowance taper

For 2026/27, the ordinary England, Wales and Northern Ireland rates are 20%, 40% and 45%. The standard personal allowance is GBP12,570; it is reduced by GBP1 for every GBP2 of adjusted net income over GBP100,000 and is therefore exhausted at GBP125,140. This withdrawal can produce a higher effective marginal rate than the headline band.

Scotland has a separate scale for non-savings, non-dividend income, reaching 48%. Savings and dividend income require their own ordering, allowances and rates. A salary illustration is consequently not interchangeable with a calculation for a founder receiving wages, dividends and overseas rent. Use adjusted net income, taxable income and gross receipts precisely: they are different amounts.

Self-employment: deduct the business costs, not the private costs

Allowable expenses reduce self-employed taxable profit. A mixed telephone, vehicle or home-office cost must be limited to the business portion. The GBP1,000 trading allowance is an alternative to deducting actual expenses, not an additional deduction on top of the same costs.

Cash-basis records generally recognize receipts when received and expenses when paid. Some equipment can be expensed under that basis, while cars and excluded assets follow separate rules. A limited company does not use this sole-trader calculation. Keep the legal entity, accounting basis, invoice date and cash date clear when work and payments cross the move date.

Dividends: 2026/27 rates and a worked example

The dividend allowance is GBP500. Above it, the 2026/27 dividend rates are 10.75%, 35.75% and 39.35%, according to the tax band occupied by the dividends. The allowance does not make dividends disappear when determining which band they use.

For a deliberately narrow illustration, assume all of a GBP10,000 dividend falls within the higher-rate dividend band and the full GBP500 dividend allowance remains available. The taxable dividend amount is GBP9,500, producing GBP3,396.25 at 35.75%. This excludes other income, personal-allowance changes, foreign withholding and relief. A foreign dividend also needs the separate foreign-tax-credit calculation; a company’s own overseas tax is not simply deducted from this shareholder bill.

Investment gains and the annual exemption

The main individual capital-gains rates in 2026/27 are 18% and 24%; the rate depends on taxable income, the size of gains and the asset. The ordinary annual exempt amount is GBP3,000. Business reliefs, exempt assets and special categories must be checked before using those rates.

Assume a GBP23,000 net chargeable investment gain, an available GBP3,000 exemption and no unused basic-rate band. The remaining GBP20,000 at 24% produces GBP4,800. This hypothetical excludes losses, reliefs and transaction-specific adjustments. Eligible FIG claimants lose the capital-gains annual exemption for the claim year, so the same numbers cannot be reused without changing the assumptions.

The four-year FIG regime is temporary and requires claims

From 6 April 2025, qualifying new residents can claim relief for specified foreign income and gains during their first four resident tax years after at least ten consecutive nonresident years. Earlier arrivals may use only the remainder of their original four-year window. The clock does not restart because the legislation changed, and unused years are not an indefinite tax allowance.

Classify the receipts before estimating savings. Foreign dividends, investment income, qualifying foreign gains and profits of a trade carried on wholly abroad may be covered; foreign employment earnings use separate rules, including Overseas Workday Relief where applicable. UK work or UK business activity does not become foreign merely because an overseas company pays. Claims through Self Assessment can remove personal and capital-gains allowances and affect other calculations. Model the fifth year before arrival and keep historic remittance-basis funds distinct from new qualifying receipts.

Foreign taxes: credit relief has a ceiling

Where UK tax and a foreign tax both apply to the same income, foreign tax credit relief can prevent part of the double charge. The available credit is generally constrained by the UK tax on that income and by the source country’s permitted tax under the treaty. An amount over the treaty limit may require a claim to the overseas authority.

Prepare a schedule linking the gross income, foreign withholding, treaty article, payment date and UK tax calculation. For example, GBP1,500 of overseas withholding does not automatically remove GBP1,500 from the UK return if the permitted credit is only GBP1,000. A residence certificate and a relief-at-source application can sometimes prevent excess withholding before payment.

National Insurance and pensions belong in the cost model

For ordinary category-A employees in 2026/27, monthly earnings between GBP1,048.01 and GBP4,189 attract 8% employee National Insurance, with 2% above that band. The ordinary employer rate is 15% above the separate secondary threshold of approximately GBP417 a month. Category-specific reliefs and payroll rounding mean the employer’s cost cannot be inferred from employee deductions alone.

The standard pension annual allowance is GBP60,000 for 2026/27, but high-income tapering, money-purchase rules and available carryforward can change it. Personal contribution tax relief has a separate earnings-based limit. Cross-border pension contributions, transfers and withdrawals require both countries’ classifications; the presence of a UK-registered pension does not decide how the destination taxes it.

Retained UK property: rent and gains continue to matter

The Non-resident Landlords Scheme can require a letting agent or tenant to deduct tax from rent, unless HMRC has approved gross payment. Gross-payment approval is a withholding permission, not an exemption from the landlord’s income-tax liability. The scheme’s usual-place-of-abode concept should not be substituted for the Statutory Residence Test.

Nonresidents can also be taxed on direct and certain indirect UK property disposals. Relevant UK property disposals have a 60-day reporting framework, with the gain, payment and rebasing rules depending on the transaction. A retained rental property therefore creates continuing obligations even where a person has successfully become nonresident for other income.

The individual compliance calendar

For the 2025/26 tax year, the ordinary paper-return deadline is 31 October 2026 and the online deadline is 31 January 2027. A person newly required to register normally needs to notify HMRC by 5 October after the tax year. Residence, foreign income and capital-gains supplementary pages must be completed where applicable.

The balancing payment is generally due on 31 January. Payments on account, where required, normally fall on 31 January and 31 July and can produce a substantial first-year cash requirement. Filing an accurate return and paying the right amount are distinct tasks. Confirm the next tax year’s published dates before scheduling them, and account for any earlier UK property reporting.

A short absence can leave a later charge on gains

The temporary-non-residence provisions can tax specified gains when a person returns after a qualifying temporary absence. They should not be described as a general tax on every asset at the moment of departure. The analysis instead depends on prior residence, the duration and character of the absence, the assets and the particular statutory category.

Before selling a business while abroad, review the current HS278 framework and model the consequences of an earlier-than-planned return. A plan that works only if a person remains abroad for the required period must also fit family and business realities. Separately, nonresidents can remain taxable on direct and certain indirect disposals of UK land and property. That source-based charge is not eliminated merely because the temporary-non-residence rules do not apply. Record acquisition values and any relevant rebasing calculations before a sale.

Inheritance tax uses a different residence clock

Since 6 April 2025, the long-term-residence framework can bring non-UK property into inheritance-tax scope, broadly using residence in ten of the preceding twenty tax years. A person who leaves can remain within that framework for a further three to ten years, depending on the prior residence history. UK property can remain relevant even where the person is not a long-term UK resident.

This is independent of the four-year FIG regime. A person can have an income-tax relief claim and still need a separate estate and trust assessment; equally, leaving the UK does not necessarily end all inheritance-tax exposure. Before transferring assets or settling a trust, identify the owner, property situs, residence history, prior gifts and any transitional treatment. The useful planning model integrates annual income, a future business sale and succession instead of treating a temporary foreign-income exemption as the entire UK tax system.

Foreign companies and income attribution

UK corporate CFC charges apply to relevant companies rather than directly reproducing a shareholder-level CFC charge for every individual. Separately, transfer-of-assets-abroad rules can attribute overseas income to a UK-resident transferor with power to enjoy it, or tax certain benefits. Commercial-purpose exemptions and FIG interactions require their own tests.

Departure, migration and continuing obligations

There is no universal individual market-value disposal of every asset simply on departure. Specific held-over-gain provisions and temporary-non-residence rules can nevertheless create charges, and UK property remains within separate source-based rules. Company and trust migration have distinct exit provisions; inheritance-tax residence tails are a different issue.