UK Taxation for Non-Residents: Income Tax, CGT, and IHT on UK Assets

A common misconception among people who leave the UK is that departure severs their relationship with HMRC entirely. In practice, UK non-residents retain a range of UK tax obligations — some of which are not immediately obvious and which, if ignored, can result in unexpected tax bills, penalties, and compliance difficulties.

This guide provides a clear overview of the key UK taxes that continue to apply after you have become non-resident. It covers income tax on UK-source income, capital gains tax on UK property, capital gains tax on UK shares and other assets, and inheritance tax on UK situs assets. It is intended for internationally mobile HNW individuals who have left or are planning to leave the UK.

Nothing in this guide constitutes tax advice. The rules are complex, subject to change, and affected by double taxation treaties that apply differently to different individuals. Professional advice is essential.

Establishing UK Non-Residence: The Statutory Residence Test

Before addressing the taxes themselves, it is worth briefly noting how non-residence is established. The UK's Statutory Residence Test (SRT), introduced in April 2013, determines residence status based on a combination of automatic tests and tie-breaker tests that count the number of UK ties you have.

The SRT is more nuanced than a simple day-count, but as a general rule, spending fewer than 16 days in the UK in a tax year will make you automatically non-resident regardless of ties. Between 16 and 183 days, the outcome depends on how many of the five UK ties (family, accommodation, work, 90-day, and country tie) you have. Full analysis of the SRT goes beyond the scope of this article, but it is the starting point for all non-residence planning.

UK Income Tax for Non-Residents

UK non-residents are subject to UK income tax on income that has a UK source. The most common forms of UK-source income for non-residents are:

UK rental income: income from UK property is taxable in the UK regardless of where the owner is resident. The Non-Resident Landlord (NRL) scheme governs how this tax is collected — either through self-assessment or via withholding by agents or tenants. Allowable deductions (mortgage interest at restricted rates for residential property, maintenance, management fees) are available.

UK employment income: earnings in respect of work actually performed in the UK are taxable in the UK, even if the employee is non-resident. The number of UK working days in the tax year determines the UK-taxable proportion of salary.

UK pension income: UK pension income (state pension, occupational pension, SIPP drawdown) is generally UK-source income and taxable in the UK, subject to any double taxation treaty provisions that attribute taxing rights to the country of residence.

UK dividends: the UK does not impose withholding tax on dividends under domestic law for most company types. The 10% notional tax credit that previously attached to UK dividends was abolished from April 2016 and no longer applies. For non-residents, the applicable double taxation treaty determines whether the UK or the country of residence (or both) can tax the dividend income; in many cases the treaty reduces or eliminates UK tax on dividends for non-residents.

UK bank and building society interest: the UK does not withhold tax on bank interest for non-residents (FOTRA — Free of Tax to Residents Abroad — applies to certain gilts, and the bank interest withholding tax regime was abolished). However, non-residents remain technically liable to UK income tax on UK bank interest as UK-source income, though in practice many treaties provide relief.

Personal Allowance: UK non-residents are entitled to the personal allowance (£12,570 for 2026/27) unless the double taxation treaty between the UK and their country of residence provides otherwise, or unless they are resident in a country with no treaty with the UK and the relevant treaty article restricts the allowance. EEA nationals and certain treaty country residents retain the personal allowance; nationals of countries with which the UK has a treaty that restricts it may not.

Capital Gains Tax: UK Residential Property

Since April 2019, UK non-residents have been subject to UK CGT on gains arising from the disposal of UK residential property. Prior to that date, CGT on UK residential property did not apply to non-residents (with limited exceptions).

The current rules apply to:

• Direct ownership of UK residential property by an individual
• Indirect ownership through certain collective vehicles and companies (introduced alongside the direct disposal rules)

The gain is computed as the difference between disposal proceeds and cost (or April 2019 rebased value if the property was owned before that date). Non-residents can elect to rebase to 5 April 2019 or to compute the gain on the full ownership period.

Non-residents must report and pay the UK CGT within 60 days of completion of the property disposal, via the UK Property Reporting Service (even if the net tax due is nil after deducting the annual CGT exempt amount). Failure to report on time incurs automatic penalties.

The CGT rates for non-residents mirror those for UK residents: basic-rate taxpayers pay 18% on residential property gains; higher-rate taxpayers pay 24%. Both rates have applied since 6 April 2024 (when the higher-rate residential rate rose from 28% to 24%). The annual exempt amount is £3,000 from 2024/25 onwards.

Capital Gains Tax: UK Commercial Property and Shares

From April 2019, the CGT net was extended beyond UK residential property to cover all UK land (commercial property, development land), and from April 2019, gains on shares in "property-rich" entities (those deriving 75% or more of their value from UK land) are also within scope.

Shares in ordinary UK trading companies held by non-residents are generally not subject to UK CGT — this is the default position (non-residents are outside the charge on UK shares unless they are trading in the UK through a branch or agency). However, there are important exceptions for:

• UK real estate investment trusts (REITs) — gains on REIT shares may be taxable
• "Temporary non-residence" rules — if a UK resident departs, acquires a chargeable asset, and returns within 5 tax years, gains accrued during the absence may be taxable on return

Inheritance Tax on UK Situs Assets

This is an area of significant surprise for many non-residents. Inheritance tax (IHT) in the UK is applied based on the situs of assets, not merely on the domicile or residence of the owner — at least in part.

The fundamental rule is that non-UK domiciliaries are liable to UK IHT only on their UK-situated assets ("UK situs assets"). This is an exception from the general rule that UK-domiciled individuals are charged IHT on their worldwide assets. So a non-UK domiciliary living overseas should, in principle, face UK IHT only on assets physically located in the UK.

UK situs assets include:

• UK residential and commercial property (held directly)
• UK bank accounts
• Shares in UK-incorporated companies (unless bearer shares, which are now largely defunct)
• UK government bonds (gilts)

Crucially, following reforms effective from 6 April 2025, UK residential property held through offshore structures (companies or trusts) is now within scope of UK IHT. Structures that previously sheltered offshore investors from IHT on UK property have been dismantled. Anyone who held UK residential property through an offshore holding company should review their position with professional advisers as a matter of urgency.

The nil rate band (£325,000 per person in 2026) and the residence nil rate band (£175,000 for qualifying estates) are available to non-domiciliaries for their UK situs assets, subject to the normal conditions.

No spousal IHT exemption applies between a UK domiciliary and a non-UK domiciliary spouse (the exemption is capped at £325,000 in that scenario). This is an important planning consideration for internationally mobile couples with different domicile statuses.

Double Taxation Treaties

The UK has double taxation treaties with over 130 countries. These treaties typically govern which country has taxing rights over various income categories, cap withholding taxes on dividends and interest, and provide tie-breaking residence rules.

For non-residents, the relevant treaty can reduce the UK tax due on UK-source income. However, treaties do not generally override UK CGT on UK property disposals (most treaties preserve residence-country taxing rights on real property gains, which in the UK's case is the UK itself for UK property). IHT treaties are far less common (the UK has very few dedicated IHT/estate tax treaties), meaning that double IHT is a genuine risk for non-UK residents with UK assets.

Practical Compliance

Non-residents with UK-source income or UK property gains must generally file a UK Self Assessment tax return. The filing deadline for paper returns is 31 October following the tax year end (5 April); for online returns it is 31 January. Payment of any tax due is also 31 January.

Failure to notify HMRC of a UK tax liability is a separate offence from failure to file. Non-residents who are not registered for UK Self Assessment but who have taxable UK income should consider whether they need to notify HMRC of this liability.

How Global Investments Can Help

Our advisory team works alongside specialist UK tax advisers to help internationally mobile HNW clients understand and manage their ongoing UK tax obligations after departure. We can help you map your UK tax exposures, identify planning opportunities within the framework of applicable rules and treaties, and ensure your overall financial and investment structure accounts for UK compliance requirements.

Please contact our team to discuss your situation.