Expat UK Tax 2026/27: Resident, Non-Dom Abolition, Foreign Income

UK expat tax has changed fundamentally with the abolition of non-domiciled status from April 2025 and the introduction of the new Foreign Income and Gains (FIG) regime. This guide covers the 2026/27 framework for UK expats, returnees, and new arrivals.

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The headline 2025 reforms

From 6 April 2025, the UK abolished the centuries-old non-domiciled (non-dom) tax status. Replaced by:

Foreign Income and Gains (FIG) regime: a new 4-year window for new arrivals where foreign income and gains are tax-free (subject to specific rules).
Residence-based taxation only: your tax position depends solely on residence, not domicile.
Inheritance Tax: also moved from domicile-based to long-term-residence-based for UK exposure.

These reforms substantially affected high-net-worth individuals who had relied on the remittance basis under the old non-dom regime. For ordinary expats (UK PAYE workers moving abroad, returnees from abroad, foreign nationals working in the UK), the residence rules remain the foundation.

The Statutory Residence Test (SRT)

UK tax residence is determined by the Statutory Residence Test introduced in 2013. Three components:

Automatic Overseas Tests (AOT) - if any apply, you're non-resident

AOT 1: spent fewer than 16 days in UK in the year, having been UK resident in 1+ of previous 3 years.
AOT 2: spent fewer than 46 days in UK, having been non-resident in all of previous 3 years.
AOT 3: full-time work overseas (35+ hours/week average) for the whole tax year.

Automatic UK Tests (AUT) - if any apply, you're UK resident

AUT 1: spent 183+ days in UK in the year.
AUT 2: only home was in UK for 91+ days, with 30+ days spent in it.
AUT 3: full-time work in UK for any 365-day period (with at least 75% of those days in UK).

Sufficient Ties Test - if no AOT or AUT applies

Count your "ties" to the UK:

Family tie: spouse, civil partner, or minor child UK-resident.
Accommodation tie: UK home available for 91+ days, with at least 1 night spent in it.
Work tie: 40+ days of UK work in the year.
90-day tie: 90+ days in UK in either of the previous 2 years.
Country tie (only for those previously UK-resident): more days in UK than any other country.

Your number of ties + days in UK determines residence:

Days in UK	Ties needed (previously resident)	Ties needed (not previously)
16-45	4	All ties (n/a)
46-90	3	4
91-120	2	3
121-182	1	2
183+	Always resident	Always resident

The new FIG regime (post-April 2025)

For those becoming UK resident from 6 April 2025 onwards (or returning after 10+ years abroad):

Years 1-4 of UK residence: foreign income and gains are fully tax-exempt in the UK, subject to simple election.
Year 5 onwards: standard worldwide UK taxation applies.

This 4-year window is generous compared to most other countries' new-arrival regimes. It's particularly attractive for:

Foreign professionals taking UK assignments.
UK returnees who have been abroad 10+ years.
Investors with substantial foreign income who plan a UK base for 1-4 years.

What about UK income for non-residents

UK source income remains taxable in the UK regardless of residence:

UK PAYE employment: taxable in the UK (subject to treaty relief for double-taxed income).
UK rental income: taxable in the UK as a non-resident landlord (NRL scheme).
UK pension income: typically taxable in the UK, though specific treaty terms can vary.
UK dividends + savings interest: typically taxable in the UK (with treaty-mandated withholding adjustments).
UK property capital gains: taxable in the UK regardless of residence.

Non-residents file Self Assessment for any UK source income above the relevant allowances.

Double Tax Treaties (DTT)

The UK has DTTs with most major countries. They typically:

Allocate primary taxation rights between the UK and the other country.
Provide a credit mechanism for tax paid in one country against the other's liability.
Set withholding rates for cross-border passive income (typically 15% on dividends, 0-5% on interest).

Common patterns by destination country:

Spain, France, Italy, Germany, Portugal: comprehensive treaties with credit mechanisms.
USA: complex treaty with specific provisions for UK pensions, US Social Security.
Australia, NZ, Singapore, Hong Kong: comprehensive treaties.
UAE, Bahrain: more limited treaties; often relevant for high-net-worth movers.
Saudi Arabia, Qatar: limited treaties; case-specific advice essential.

For substantial cross-border income, always check your specific destination's treaty with HMRC's DTT directory.

Worked example - UK PAYE worker moving to Spain

Senior accountant earning £75,000 in the UK, moving to Spain on 1 October 2026 to take a permanent role.

UK part of 2026/27 tax year (6 April - 30 September):
  Earnings (PAYE):                £37,500
  Personal Allowance:              £12,570
  Taxable in UK part:              £24,930
  Income tax (basic rate):          £4,986
  Plus NI accrued via PAYE through this period

Overseas part of 2026/27 (1 October - 5 April):
  Spanish earnings:                Generally not UK-taxable
                                   (Spain has primary right under treaty)
  Continue UK rental income (£1,000/month):
                                   £6,000 - taxable in UK as NRL
                                   (file SA106 supplement)

P85 + Self Assessment both filed - see our P85 vs SA guide.

Returning to the UK - what to expect

If you return to the UK after a period abroad:

Check your residence position under SRT for the year of return.
Apply for FIG regime if eligible (away from UK for 10+ years).
File Self Assessment if you have ongoing foreign income or UK income above the relevant allowances.
Re-register for NI if you're starting UK PAYE work - your NI history is preserved but the new employer needs your NI number.
State Pension forecast: check via your Personal Tax Account to see if your time abroad affects qualifying years.

Common expat pitfalls

Underestimating UK ties - keeping a UK home or having minor children UK-resident creates ties that can pull you back into UK residence.
Misunderstanding "split year" treatment - split year rules let the UK part of the year be UK-taxable while the overseas part is not, but the rules are technical.
Missing Self Assessment for UK rental - many expats forget the NRL filing requirement.
Over-reliance on tax treaties - treaties allocate rights but don't always eliminate double taxation. Always verify specific treaty provisions.
Day counting errors - partial days count under specific rules. Border crossings via UK transit can count.
Ignoring temporary non-residence rules - if you return to the UK within 5 years, certain income (e.g. dividends from a personal company) is retroactively taxed.

When to talk to an international tax specialist

For routine moves (UK PAYE worker to a permanent role abroad, no UK property left behind), the P85 + new country's tax compliance covers it. A specialist international tax adviser earns their fee when:

You have substantial UK assets (property, investment portfolio, business interests).
You're moving to / returning from a country with complex tax interactions with the UK.
You have UK-domiciled children inheriting UK assets.
You're considering expatriation for tax reasons (legal but complex post-non-dom abolition).
You expect to return to the UK within 5 years (temporary non-residence rules).

The Society of Trust and Estate Practitioners (STEP) lists specialist international tax advisers at step.org. For substantial cross-border tax planning, particularly post-non-dom abolition, professional advice is essential.

Disclaimer

PayslipIQ provides automated educational guidance based on the figures you supply. It is not regulated tax advice. International tax depends on the destination country's rules + the UK tax treaty + your specific circumstances + your domicile and residence history. For substantial cross-border tax decisions, particularly post-non-dom abolition, consult a CTA-qualified international tax adviser.