An increasing number of people seem determined to leave the UK. But whether you pine for adventure, are looking to start a new career or just want to lower your tax bill, make sure you don’t mess it up.
Failing to manage your UK tax exit properly could cost you dearly.
The United Arab Emirates, for example, does not charge personal income tax or capital gains tax (CGT). Despite being caught up in the Middle East conflict this year, it remains popular with British entrepreneurs who can move there in advance of selling a business with the aim of eliminating their CGT bill.
However, if you don't spend more than five years outside the UK before returning, all that tax planning will come to naught. Spend a day too long visiting your family back home and you could fall foul of the rules, meaning the gains you realised abroad will be brought back into scope of UK CGT. And don’t die. Unless you have spent more than 10 years out of the country, your estate will be liable for inheritance tax, charged at 40 per cent above the nil-rate band.
Nevertheless, the number of people — especially young people — leaving the country has been increasing. And with further tax rises a possibility at the Budget this month, the drumbeat of stories about people leaving for tax-friendlier climes is gathering pace. (Though advisers acknowledge that more people talk about leaving the UK than actually do it.)
“There are these hidden costs of living overseas, it’s not all just turn up and enjoy the sunsets,” says Max Porter, tax partner at ATC Tax, a consultancy firm. “There are things that people don’t think about until it goes wrong.”
At best, people who juggle their income and assets, such as pensions, investments or property, across multiple countries often face increased adviser fees. Certainly, one suspects, the billionaire taxpayers whose departures have made headlines in recent weeks have the best advice that money can buy. But it can also be an administrative problem — and, at worst, can lead to surprise tax bills and other costly errors.
Remote working has allowed people greater freedoms to operate in different countries from their employer — but this can create a false sense of security. “[The] globalisation of personal wealth is happening much faster than the globalisation of the infrastructure around it,” says Cristina Teixeira, founder of Astride, an AI-powered cross-border tax and wealth platform.
As a result, globally mobile individuals are typically forced to navigate multiple complex and fragmented rules, which can lead to pitfalls for the unwary.
What’s more, foreign jurisdictions are becoming more alive to potential tax errors that Britons make when they arrive. Requests by overseas tax authorities for information on UK taxpayers reached a seven-year high in 2025, according to data obtained by Price Bailey, an accountancy firm.
So what are the common mistakes people make? FT Money investigates.
Residency woes
Tax residency can be triggered after someone spends at least 183 days a year in a country. However, the rules are often more complicated than they first appear. For example, the UK calculates residency based on the statutory residence test. The number of days someone can spend before becoming tax resident depends on several factors, including how many ties they have to the country. Those with more ties may need to limit their presence in the UK to 15 days or fewer to maintain their non-resident status.
Porter, who has helped many Britons who have relocated to the Middle East, warns that unexpected events can upend careful planning about tax residency.
To benefit from the Gulf states’ low taxes, taxpayers need to be resident and have ceased being resident in the UK, which taxes people’s worldwide income and gains. The UK also has anti-avoidance rules that tax certain income and capital gains realised abroad if a person returns to the UK within five years.
During the pandemic, many Britons in the Middle East lost their jobs and returned to the UK earlier than originally planned, re-establishing their British tax residency. Consequently, their Middle East earnings became subject to UK income tax. More recently, thousands opted to come back to the UK after the war in Iran broke out, although many have since returned.
“Once you go one day over [your number of allowed UK days], there are no replays,” Porter warns.
Steven Coelho, partner at Saffery, an advisory firm, also says he has seen people “tripping up” by coming back to the UK too early after having realised gains overseas, especially because people might not realise the legislation requires the taxpayer to be a non-UK tax resident for more than five years, which often means six tax years in practice.
Other considerations can also disrupt planning. “Often people just wake up and realise ‘this place is not for me’,” says Kevin Austin, director of Access Financial, a global umbrella company and international payroll solutions provider. Sometimes their partner or children are unhappy in the new location. Whatever the reason, unravelling a relocation can result in unplanned tax consequences.
Multiple tax claims
Individuals can become tax residents in two or more countries, allowing each country to claim taxing rights on their income or assets.
Many countries have entered into treaties aimed at preventing double taxation of income or capital. But experts caution that the treaties do not prevent individuals from becoming tax residents in more than one country; they simply allocate which country gets the right to tax in that eventuality.
Rachel de Souza, partner at RSM, an accountancy firm, warns that “double tax treaties are not perfect” and there is often a high administrative cost for people who need to access them.
Individuals who become tax residents in multiple countries can face cash flow problems if each country taxes their income simultaneously. Where a treaty applies, they can claim a credit from one country to avoid ultimately paying tax twice, but repayment delays can prolong the strain.
The possibility of multiple countries claiming taxing rights over an individual’s assets does not just apply to a person’s income, but also to their capital. While the UK has more than 120 double tax treaties with other countries in relation to income and gains, the number of treaties it has in relation to wealth is much smaller, at just 10, de Souza adds. This means that an individual could find themselves not covered by the protection of a double tax treaty if the dispute relates to wealth held in a country not within the UK’s treaty network.
What’s more, different jurisdictions can claim taxing rights based on different criteria. De Souza gives the example of an estate case she was involved with, which, she says, was the “perfect storm” because Ireland, the UK and Spain all claimed the right to apply inheritance tax.
The individual had been living in Ireland at the time of death, and Ireland taxes the estate of the deceased based on tax residency. However, they were born in the UK and had been a long-term resident, the criterion which the UK has used to levy inheritance tax since 2025. Meanwhile, a beneficiary of the estate was living in Spain, which taxes inheritance on a recipient basis.
“In that scenario, you’re in a whole world of pain,” de Souza says. “It’s the heirs that suffer.
“At a time when people are emotionally vulnerable following a death, to be told the estate could be taxed [at least] twice is a real unpleasant shock. It also means you need to employ two sets of lawyers and accountants. It is complicated, as taxes will need to be paid in both countries and then reclaimed; it can take years to actually resolve the situation.”
Other assets
If an individual decides to keep a UK property that they own and let while they live abroad, the rental income will be subject to UK income tax, regardless of where they are resident. They will need to continue filing UK tax returns as a non-resident landlord and, unless they register with HM Revenue & Customs as a non-resident landlord, will suffer a 20 per cent withholding tax on rental income.
They may also need to comply with other regulations, including the Making Tax Digital rules. These require individuals to file digital quarterly updates on rental income above £50,000. The threshold will fall to £30,000 from April 2027 and £20,000 from April 2028.
Another lesser-known pitfall can occur if a person decides to keep their UK-based property empty while they are abroad, perhaps to live in when they return to the UK. Tim Stovold, partner at Moore Kingston Smith, an accountancy firm, says most home buildings insurance policies restrict cover if a property is left empty for more than 30 days. “People might be merrily living abroad unaware that their home buildings insurance is invalid after a month of their being out of the country,” he says.
Other aspects of people’s personal finances that can trip up unsuspecting UK leavers include tax wrappers such as Isas. While these are “a no-brainer to have in the UK, they don’t travel well,” warns Stovold.
There are three main problems with Isas held by people living abroad. First, individuals cannot contribute to their accounts if they are non-UK residents, and must notify their provider when they have left the country.
Second, Isa income and gains are often taxable in another country, as the tax exemption only applies in the UK.
Third, in countries such as the US, Isas and other investments can lead to complex and expensive reporting requirements. Stovold gives the example of one client who moved from the UK to the US but had not realised the difficulties she would encounter with her UK-based Isa. The Isa was worth about £60,000 but the professional fees she paid in the US to comply with the reporting requirements meant it made more sense for her to encash it and invest in something else in the US.
“Pensions can also be horribly complicated,” says Dawn Register of tax specialists BDO. Sometimes pensions held in the UK can attract tax in another country, even in cases where no payments have yet been made. Meanwhile, individuals living outside the UK are limited in how much they can contribute to a UK pension by the amount of taxable income they have in the UK, meaning those living abroad may not be able to contribute much to UK pensions.
Receiving payments from multiple pensions built up in different countries can also be administratively problematic, according to Christian, a Denmark-based academic who has worked in several countries and now receives income from six pension pots from four countries, including the UK.
He says HMRC made a mistake in classifying his UK employer and state pensions, which took several years to sort out, while the Danish tax authority took three to four years to accept that his US employment pension should be taxed as a pension.
“One has to understand these very different systems, what your obligations are and how they operate,” says Christian, who asked us not to use his real name. “There is no simple place to go to figure this out . . . because I have several countries to deal with, I pay quite a lot to accountants.”
How to avoid the pitfalls
Advisers recommend several actions to avoid falling into these myriad international tax traps. These include seeking advice ahead of any relocation and again at least six months before any potential return to the UK.
Register suggests that people aim to simplify their financial affairs ahead of any relocation, both to make any transition simpler and to have a clear idea of what they own, especially because, under rules known as the Common Reporting Standard, more than 110 tax authorities share information with each other about individuals’ financial assets, including bank accounts and investments.
De Souza says that it is sometimes simpler for people to put wealth held across multiple countries into a structure such as a trust or foundation, so everything is held in one jurisdiction. She also recommends that people have a separate will for each country in which they have assets.
“It’s not a case that you are home and dry if you’re UK non-resident,” says Coelho of Saffery. “The devil is always in the detail.”