If you are planning a move to the UK you need to understand what the UK’s new taxation rules mean for tax on your worldwide income.
In April 2025, the UK brought in major changes that affect how expats living in the UK are taxed. Whether you are moving for a couple of years or planning a permanent shift, it’s important to know how the rules work so you don’t get any unexpected surprises.
Becoming A UK Tax Resident
The UK automatic residency tests include:
- Residing in the UK for 183 days or more in the tax year.
- Spending at least one day of the tax year in the UK and working full-time in the UK for a period of 365 days.
- If your home was in the UK for 91 days or more in a row and you visit or stay in the UK for at least 30 days of the tax year.
If you do not meet the residency tests under any of the automatic tests you may still be a UK resident if you meet other conditions, such as sufficient ties and day-count thresholds.
New UK Residents
Once you are a UK resident you are generally taxed on your worldwide income.
Historically new UK residents were eligible for the “non-dom” rules. These rules allowed foreign income to be excluded from UK taxation when it is not remitted into the UK and meant that expats who were “non domiciled” individuals could return to their home country without any ongoing UK tax considerations (other than income relating to assets remaining in the UK).
From April 2025 all UK residents are taxed on their worldwide income, regardless of their domicile.
UK Taxes On Worldwide Income
Under the new tax rules expats who are UK residents will generally:
- Pay UK taxes on their worldwide income, regardless of whether the money is brought into the UK.
- Pay capital gains tax on worldwide assets.
- Be subject to inheritance tax rules. Note that inheritance taxes may continue to apply even after departing the UK for individuals who reside in the UK for ten years or more.
Four Year Exemption
New arrivals to the UK (who have not been UK tax residents within the previous ten consecutive years) will receive 100% relief on foreign income and gains for the first four years of their UK residency.
This means you can live in the UK for up to four years before being taxed on your worldwide income or avoid the double taxation of worldwide income if you only live in the UK for less than four years.
Conclusion
Moving to the UK has significant tax implications for expats. Key issues revolve around when you commence UK residency. Proper planning before departure can minimise double taxation, optimise use of tax concessions and exemptions, and ensure you remain compliant in the UK and your home country.