UK Expat Tax Planning
If you live or work overseas, or are planning to do so, your tax status will almost certainly be affected by your change of residence from the UK to overseas. A common misunderstanding of UK expats is that when they move abroad they are instantly exempt from UK tax. There are rules as to when a UK expat has to pay, and which kind of tax, even if living and working abroad.
Do I have to pay UK tax when living and working abroad?
Your tax liability in the UK depends on your tax residence status. It is influenced by things such as the source of income and capital gains, where your other assets are located and the length of your time spent in the UK.
In order to be classed as a non-resident and exempt from UK income tax on your foreign income, you will need to:
- Work abroad for at least one full tax year;
- Spend no more than 182 days in the UK in any tax year, and;
- Spend less than 91 days in the UK on average over a four-year period
However, as non-residents, you will still be charged income tax arising from a source in the UK. Moreover, from 6th April 2015, expats and non-residents who are selling a UK property will owe capital gains tax on any gains made.
Double taxation agreements
The UK has double taxation agreements with many counties, and if you reside in one of these, this treaty will work in your favor, restricting UK taxation rights to your income there. However, income from UK property and overseas property will be taxable in the UK regardless of any tax treaties.
Double taxation agreements come in handy when setting up retirement plans abroad, or making investments (especially if that country is Hong Kong, as it has no taxation on pension income and low tax on income).
UK Inheritance Tax (IHT) can apply to non‑residents on a worldwide basis, depending on their Long‑Term Residence (LTR) status under the post‑2027 rules.
At Platinum Financial Services, we use the Soteria Trusts brand to present our Inheritance Tax solutions. Under the new regime, domicile no longer determines IHT exposure. Instead, liability is based on whether an individual meets the UK’s Long-Term Residence (LTR) test at the time of death.
Criteria for UL Long-Term Residence under the new rules:
If you spent 10 years in the UK in the past 20 years, you are classified as a Long-Term Resident (LTR) for IHT purposes, and your worldwide assets will get into the IHT scope on death.
Once you pass the 10‑year UK residence threshold, your inheritance tax position changes fundamentally.
0–9 Years UK Resident
You are not a Long‑Term Resident. UK Inheritance Tax applies only to your UK‑situs assets. Your offshore assets remain outside the UK IHT net.
10+ Years UK Resident (LTR Status)
You become a Long‑Term Resident (LTR) under the post‑2027 regime. From this point, your entire worldwide estate becomes fully subject to UK IHT at 40%.
IHT Tail Explained
If you qualify as a Long‑Term Resident and later leave the UK, you do not fall out of the inheritance tax system immediately. Your worldwide estate continues to be within scope for a period known as the Inheritance Tax Tail.
The duration of this tail is linked directly to the length of your UK residence. It operates on a sliding scale, with longer residence creating a longer period of continued exposure.
| YEARS OF UK RESIDENCE | LENGHT OF IHT TAIL |
|---|---|
| 10 –13 years | 3 years |
| 14 years | 4 years |
| 15 years | 5years |
| Increases by 1 year for every year of residency | |
| 20 + years | 10 years (the maximum tail) |
Inheritence Tax and Residency
If an individual is classed as LTR at death, their entire worldwide estate becomes subject to UK IHT. The standard nil‑rate band remains £325,000 per person (or £650,000 for a couple), with the value above this taxed at 40%.
If an individual is not classed as LTR, only their UK‑situs assets—such as UK property, UK‑based investments, or certain UK‑connected structures—are subject to IHT. Assets located outside the UK fall outside the scope of UK IHT for non‑LTR individuals.
For many British expatriates and foreign investors, this shift has been significant. The fact that worldwide assets can now be pulled into the UK IHT net based solely on residence history, rather than domicile, often comes as a surprise. Many discover that their heirs may receive far less than expected unless appropriate planning is in place.
How can Platinum Financial Services help?
Protecting your wealth is the goal of Soteria’s IHT Planning Service.
We will guide you through the planning process and advise you on the best possible solutions tailored to your specific needs.
Get in touch with us today and we can advise you on the most efficient way to legitimately reduce your IHT liability.
Protect Your Savings
In case of a sudden illness or accident, you don’t have to utilise your savings to pay the high price for medical treatment. Surgery and room costs in Hong Kong’s private hospitals can easily reach US$100,000 for major heart disease and cancer. This can be covered by the insurance plan, should you have coverage in place. Your savings should be used for their intended use, such as buying a home, funding your children’s education and retirement.
ANDREW CASE STUDYThe cost of quality healthcare is at a premium. We have close partnerships with market-leading international healthcare insurance companies that offer sustainable products making sure that we can match the required level of cover to your budget.
We don’t charge you for our services, so premiums are the same as going directly to the insurance company. What you get is advice on the plan’s benefits and coverage limits that make sense to you and your financial situation.
Don’t leave your financial future to chance.
Contact Platinum Financial Services to help you through your financial journey.
