Over a career spent advising internationally mobile clients, one misconception comes up more than any other: that becoming a UK non-resident means you’re done with the UK tax system entirely. You’ve left. You’re living tax-free in the UAE. What could the UK’s tax, payments and customs authority HMRC possibly want from you now?
Quite a lot, as it turns out. There are two areas where this assumption costs people money, sometimes a great deal of it. The first is the belief that UK tax returns are no longer your problem. The second is the notion that your residency status is safely settled, when it may not be.
Do you still need to file a UK tax return?
If HMRC issues you with a notice to file a tax return, you are legally obliged to submit one, regardless of where you live. If you have nothing to report, you can contact HMRC and request that it withdraws the notice, but you must do this before the deadline. Late filing penalties apply, even if you don’t owe a single penny in tax.
Beyond that, there are several common triggers that require UK tax returns for non-residents: UK income, such as from rents or pension payments; the sale of UK land or property; reclaiming overpaid UK tax; or claiming relief under a double taxation agreement to exempt UK income from UK tax.
The most frequent reason I see expats needing to file, and often not realising it, is UK rental income. Many people left the UK, kept a property, found a tenant and quietly assumed the rental side of things didn’t require any engagement with HMRC. It does.
What if you should have been filing but haven’t?
This is more common than people admit. The good news is that HMRC tends to be more lenient when you approach them proactively to put matters right, rather than waiting to be found. For landlords, there is a specific Let Property Campaign, designed to help people get their tax affairs up to date. Penalties through this route are typically lower than if HMRC comes to you first.
It’s also worth noting that if you sell or dispose of UK land or property, that must be reported to HMRC, with any pending tax paid within 60 days. The sale may also need to appear on a self-assessment return.
Looking ahead, the Making Tax Digital regime is changing how property and self-employment income is reported. From April 6, 2027, expats with UK property income, not profit, exceeding £30,000 ($40,500) must report under this new system. It’s worth getting ahead of it.
Expensive mistake
You may be living in the UAE, drawing a tax-free salary and entirely confident that you are UK non-resident. But what if you’ve got it wrong?
If you are a UK tax resident, you are generally liable to UK tax for up to 47 per cent on income and 24 per cent on capital gains globally. From April 6, 2025, your exposure to 40 per cent UK inheritance tax (IHT) is now also determined by your UK residence history alone. The concept of domicile, which used to be the deciding factor for IHT purposes, has been abolished.
If you are genuinely UK non-resident, the position is far more favourable. You are generally taxed on UK-source income only. After five consecutive years of non-residence, your UK capital gains tax exposure is broadly limited to UK land and property. After 10 years, your IHT exposure is limited to UK assets only, as overseas assets fall outside of the net.
The stakes, in other words, are high. So how do you know where you stand?
Statutory residence test
Your UK residence status is determined by the Statutory Residence Test (SRT), a complex piece of legislation with a lot of room for costly mistakes. The SRT sets out how many days you can spend in the UK in a given tax year without becoming resident. But here’s the thing: those thresholds aren’t fixed. They range across 15, 45, 90, 120, and 182 midnights, depending on your circumstances.
The most common mistake I see is someone calculating their limit for one tax year and then assuming it will remain the same. It doesn’t. Your personal threshold can shift depending on how many years you have been overseas, how much time you spent in the UK last year, how many hours you work overseas, whether you have available accommodation in the UK, how many days you work in the UK, whether you spend more time in the UK than in any other country and where your family are living.
That sounds like a lot and it is. If you get this wrong and inadvertently become UK resident, speak to an adviser as soon as possible. There may be steps you can take to reduce an unexpected tax bill but the options narrow the longer you leave it.
Even if you have no UK income, no property and are confident in your non-resident status, it’s still worth ensuring HMRC has a clear record of your UK residence history. The rules are tightening, the April 2025 IHT changes are the most significant shift in a generation, and the best protection is good documentation and an annual review of where you stand.
Non-residence is not a switch you flip once. It requires ongoing attention. The expats who get this right are the ones who treat it that way.
Peter Webb is head of tax at Metis, a DIFC-based wealth adviser
