Leaving the UK — Tax Planning for Your Departure
Leaving the UK is not simply a matter of packing up and going. For individuals with UK tax residence, departure triggers a series of tax consequences that need to be carefully managed — both before you leave and in the years that follow.
When Do You Stop Being UK Tax Resident?
The date on which you cease to be UK tax resident is determined by the Statutory Residence Test — and getting this wrong can be costly. Leaving the UK does not automatically mean you are no longer taxable here. If you spend too many days in the UK after your departure, or fail to meet the relevant conditions under the SRT, HMRC may treat you as still UK resident for that tax year — with significant consequences for your income tax and capital gains tax position.
Capital Gains Tax on Departure
One of the most significant risks on leaving the UK is the temporary non-residence rules. If you leave the UK and dispose of certain assets while non-resident, those gains can be brought back into charge when you return — even years later. For individuals with significant asset portfolios, understanding which assets are caught by these rules and planning disposals accordingly is essential.
The Five-Year Rule
Individuals who leave the UK and return within five years — or in some cases fewer — can find that gains realised while they were non-resident are taxed on their return. For those considering a temporary period abroad, whether for work or lifestyle reasons, this is a critical planning consideration that is frequently overlooked.
Inheritance Tax After Leaving
Leaving the UK does not immediately remove you from the scope of UK inheritance tax. Under the new residence-based IHT regime introduced in April 2025, individuals who have been UK resident for 10 out of the last 20 years remain within the scope of UK IHT on their worldwide assets — even after departure. The rules on how quickly you exit the UK IHT net depend on how long you have been UK resident and require careful analysis.
What to Do Before You Leave
The decisions made before departure are often more important than those made after. We advise clients on the optimal timing of departure under the Statutory Residence Test, the treatment of employment income straddling the departure date, capital gains tax planning ahead of departure, pension and investment planning in the context of the new residence regime, and the inheritance tax implications of leaving and the timeline for exiting the UK IHT net.
How Laggan Can Help
We advise individuals and families planning to leave the UK across all aspects of their departure — from residence planning and the timing of asset disposals to the longer-term implications for inheritance tax and returning to the UK in the future.
If you are planning to leave the UK, speak to us before you go.
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