Top five tax and financial considerations for advice clients leaving the UK

Anna Warren, Tax Director at Bentley Reid, outlines the key tax and financial issues facing UK residents who relocate abroad, as new data points to a rising number of millionaires leaving the country. She highlights how residency rules, capital gains exposure, pension planning and the new long-term residence regime can significantly affect expats moving to destinations such as Dubai or Hong Kong, underlining the importance of careful, cross-border financial planning.

According to The Times, 10,800 millionaires left the UK in 2024, citing high taxation as a primary reason.

There can be many financial complications when leaving the UK if expats take the necessary steps to make a smooth move.

This article breaks down the top five tax and financial considerations for expats who have left the UK for Dubai, Hong Kong or other jurisdictions.

 Tax Considerations

1. Becoming a non-UK resident

The Statutory Residence Test (SRT) determines whether UK individuals remain subject to UK taxes after moving abroad.

Expats should be seeking advice on the following:

• The second automatic UK ties test: if someone plans to leave the UK, but retain a home here, the date at which they start to have a home overseas will impact whether this complex test will be triggered
• Split-year treatment: if a Brit leaves part way through a tax year, they need to meet certain tests so that a portion of their income or gains is not taxable in the non-resident part of the year

2. Exiting the UK Tax System: CGT and Income Tax implications

There is a common misconception that people can move abroad for a couple of years and then return, without tax consequences. However, the devil is in the detail.

Temporary Non-Resident Rules are predominantly aimed at UK resident taxpayers trying to take advantage of a short-term period of non-residence to realise capital gains and certain types of income.

To avoid UK CGT or income tax on certain assets/receipts on a return to the UK, individuals must be non-UK residents for at least five years and one day, which means some people actually need to be non-resident for six tax years. The rules catch a variety of income and gains, potentially including gains or distributions from an entrepreneurs’ company, life insurance chargeable event gains, certain pension income and more.

For entrepreneurs who are planning to leave for a few years, selling their company or taking distributions from their company abroad may not achieve the outcome they desire.

It’s worth seeking tax advice from the destination country that supports tax advice received from leaving the UK.

This often means connecting with advisers in each jurisdiction to talk to each other to provide the best solution.

3. The New UK Long-Term Residence Regime

The UK government is replacing the concept of domicile with the concept of Long-Term Residence, which significantly affects individuals planning to leave the UK.

Under the new system, the key changes to be aware of are:

• IHT Tail: The length of the “tail” will depend on how many years an individual has been UK resident – the current tail is three years, but this could now potentially be up to 10 years – for those who leave the UK before 6 April 2025 there are transitional rules.
• The remittance basis is being scrapped: instead, individuals who have been a non-UK resident for 10 out of the previous 20 years will have four years where their Foreign Income and Gains (FIG) will be outside of UK tax regardless of whether remitted. However, for those who have historically claimed the remittance basis, they will still need to trace remittances.

For expats who have just left the UK, these points may be more of a concern in the future, but they could determine how long they wish to remain non-UK resident.

Other Considerations

4. Financial & Pension Goals

Relocating abroad isn’t just about reducing tax, pensions and wider finances need to work with lifestyle and long-term plans.

For example, for those moving to Dubai, UK pensions are an important consideration. Under the UK–UAE tax treaty, most private pensions can be paid without UK tax, provided the correct residency and HMRC forms are in place. This makes them a valuable source of retirement income for expats. However, government service pensions are treated differently and may remain taxable in the UK.

It’s also worth noting that from 2027 unused UK pensions will start to fall into the scope of UK Inheritance Tax, which could affect how to structure wealth for the family.

Alongside pensions, broader planning is essential. Good cash flow planning ensures expats have the right balance between liquid assets for near-term needs, such as property purchases, school fees or healthcare, and longer-term investments to support retirement.

Building a wider financial plan helps keep everything connected – clarifying why they are moving, what they want to achieve, and how pensions, investments and lifestyle goals fit together.

5. Investment Considerations

Where to Hold Assets

When relocating, structuring investments in a tax-efficient way can help protect and grow wealth.

Expats moving to Dubai or elsewhere in the Middle East should hold their banking and custody accounts in a neutral third country rather than in their new country of residence.

Choosing the Right Investment Structures

An investment strategy should be tailored to an expat’s personal circumstances and individual needs.

Expats relocating to other countries should consider exploring the following:

• Business structure – is their business in the most tax-efficient structure to realise liquidity events when expats leave the UK?
• International Pensions – Some jurisdictions, such as Dubai, offer expat-friendly pension schemes with tax advantages
• Offshore Funds – Investing in offshore funds rather than UK funds directly can have tax benefits
• Location of custody account – Offshore brokerage accounts can offer tax efficiency and flexibility

Conclusion

Relocating abroad can create tax-saving opportunities, but this shouldn’t be assessed in isolation.

Careful structuring, to avoid unexpected tax liabilities and ensure financial security, is paramount.

Expats need to develop a personalised relocation plan to help ensure a structured, tax-efficient transition to tackle through the complexities of cross-border wealth planning.

By Anna Warren, Head of Tax at Bentley Reid

Sources:

• The Times, “Capital gains tax receipts fall 10% as wealthy exit UK,” 25 April 2025.
• The Times, “The rich aren’t popular, but it’s better having them inside the tent,” 29 April 2025.