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Leaving the UK isn’t just about packing your bags—it’s about ensuring that HMRC recognises your departure for tax purposes. Simply moving abroad does not guarantee non-resident status. With stricter UK tax rules and significant reforms coming into force from April 2025, it’s essential to manage your departure carefully to break UK tax residence and minimise exposure to income tax, capital gains tax, and inheritance tax. This blog sets out a smart, structured exit plan for those looking to become non-resident and sever their tax ties with the UK.
Know the Statutory Residence Test (SRT)
The SRT determines whether you are a UK tax resident in any given tax year. It includes three stages:
- Automatic Overseas Test – You’re automatically non-resident if you:
- Spend fewer than 16 days in the UK (if previously resident), or
- Spend fewer than 46 days (if not previously resident), or
- Work full-time overseas and spend no more than 91 days in the UK, with fewer than 31 days working in the UK.
- Automatic UK Test – You’re automatically resident if you:
- Spend 183 days or more in the UK, or
- Have your only home in the UK, or
- Work full-time in the UK.
- Sufficient Ties Test – If neither automatic test determines your status, HMRC assesses the number of “ties” you have to the UK against how many days you spend there.
The number of UK ties and allowable days are key to whether you’re considered a tax resident. Reducing these ties is the core of an effective exit plan.
Minimise UK Ties to Stay Non-Resident
To pass the Sufficient Ties Test and qualify as a non-resident, you need to minimise your UK connections. The more ties you maintain, the fewer days you can spend in the UK without triggering tax residency. Here’s how to reduce them:
Family Tie: Avoid having a spouse, civil partner, or minor children residing in the UK. If children stay for more than a set number of days without you, this can still count as a tie.
Accommodation Tie: Do not maintain a home in the UK that’s available for your use. Selling, ending leases, or ensuring no UK accommodation is available is essential.
Work Tie: Ensure you do not work in the UK for more than 40 days in a tax year. A “working day” is defined as more than three hours of work.
90-Day Tie: This applies if you’ve spent 90 or more days in the UK in either of the previous two tax years. Careful forward planning is necessary to reduce this Tie in future years.
Country Tie: If the UK is the country where you spend the most days in a tax year and you’ve been a UK resident in one of the previous three years, this Tie is triggered.
Reducing these ties requires both lifestyle changes and accurate tracking of your movements and connections.
Make Use of Split-Year Treatment: If you’re leaving the UK partway through a tax year, you might qualify for split-year treatment. This allows the tax year to be divided into a resident and non-resident portion. To qualify, you must meet one of the specific split-year cases, such as:
- Starting full-time work abroad
- Accompanying a spouse or partner who starts work abroad
- Ceasing to have a UK home and establishing a home overseas
Split-year treatment can protect foreign income earned after leaving the UK from UK tax. Planning the exact timing of your move is crucial to maximise the benefits.
Plan for April 2025 Tax Reforms
Major changes are expected to come from April 2025 that redefine how non-residency is treated for tax purposes. The concept of “domicile” is being replaced, and residency will drive tax exposure across all income, gains, and inheritance tax.
This means:
- If you are a UK tax resident, you will be taxed on worldwide income and gains.
- Inheritance tax exposure can continue for up to 10 years after leaving the UK.
- Non-resident status must be clearly established and maintained to protect from UK tax.
As a result, reducing ties to Britain and establishing clear, ongoing non-residence is more important than ever.
Smart Exit Planning Tips
Track Your UK Days Meticulously: Even one extra day in the UK can change your tax status. Use digital tools or manual logs to track days and nights spent in the UK.
Close or Reassign UK-Based Accommodation: Don’t just move abroad—make sure you no longer have access to UK accommodation. If you retain a UK property, ensure it’s let out and unavailable for your use.
End UK-Based Employment or Consultancy: Working remotely for UK clients or businesses could count towards UK work ties. Ensure you move employment contracts abroad or shift client relationships to overseas structures.
Cut Professional and Social Connections: Cancel memberships of UK-based clubs, societies, or associations. Transfer banking, insurance, medical services, and professional bodies to your new country.
Establish Overseas Residence Clearly: Secure long-term accommodation abroad, register for local taxation, and document evidence of your new permanent base. This strengthens your non-residency position.
Time Your Departure: Plan to leave the UK just after the start of the tax year (6 April) to maximise the period as a non-resident. This helps reduce UK tax exposure for that full year.
Becoming a non-resident for UK tax purposes is possible with careful planning. It’s not just about relocating; it involves severing UK ties, timing your move, and documenting your new life abroad. As tax reforms tighten, a hasty departure can be costly. If you’re planning to leave the UK permanently or long-term, structure your exit strategically and seek tailored guidance. With proper planning, you can achieve non-resident status and safeguard your global wealth from unnecessary UK tax.
