If the financial press is to be believed, no-one is coming to live in the UK at the moment. Rather, it’s a case of ‘Will the last one out please turn off the lights?’.
However, as usual, the picture is far more nuanced and proves what family advisers already know: rarely are such moves driven by tax planning alone. Geopolitics aside, individual family circumstances – children’s schooling, proximity to ageing parents, access to healthcare, and economic opportunity – can all play a part. Perhaps even, given the heatwaves in much of Europe this summer, the British climate will become an increasingly attractive proposition?
Much has been written about the income tax breaks for returnees – the Temporary Repatriation Facility being one example of how the profound changes introduced by Finance Act 2025 brought the occasional silver lining. What else is there that clients routinely overlook when planning a move to the UK, and how can we as advisers add real value by engaging earlier in the process?
Work, not play
Becoming UK resident whilst a director or de facto controller of a non-UK company can cause the company to become UK tax resident under the central management and control test. Careful consideration of where business decisions are made should begin before the individual arrives in the UK, and those decisions should be documented carefully. Company governance documents may need to be re-written, but this is best done pre-arrival.
Less well known is that working for an existing non-UK employer after becoming UK resident can cause that employer to have a tax presence or permanent establishment in the UK, potentially obliging the employer to register for and operate Pay-As-You-Earn (PAYE). Alternatively, HMRC can request that the employee operates PAYE on their own earnings.
Visa rights are also worth considering. Whilst many nationalities can visit the UK for up to six months without a visa, visitors cannot work in the UK unless their visa expressly permits them, even if that is unpaid work for a UK business.
Family matters
It’s also best not to assume that a pre-nuptial agreement entered into abroad before arriving in the UK will be automatically recognised or enforced by the English courts. Unlike many jurisdictions, English law does not accord contractual status to nuptial agreements in the same way, and the terms or the circumstances in which the foreign pre-nup was entered into may cause it to have less weight in the English court. A confirmatory English post-nuptial agreement would be best practice but, if that is not feasible, there may be other options.
Although domicile is no longer the connecting factor for UK Inheritance Tax since 6 April 2025, it is far from irrelevant. Under English law, domicile continues to play a key role in determining whether English succession laws apply to an individual’s assets on death, both in the UK and abroad. If testamentary freedom is desired, acquiring English domicile may be a good thing because, from the perspective of English law at least, more of your worldwide assets pass in line with English succession rules on your death. It can be a double-edged sword, though, because only English domiciled individuals are subject to the closest thing that English law has to forced heirship rules: the Inheritance (Provision for Family and Dependents) Act 1975. Also, understanding whether English succession laws will cause conflict with existing testamentary documents, or whether estate plans made under the conflicting laws of the former home jurisdiction will no longer work well once English residency starts, is worth considering. However, at least acquiring English domicile can now be done without fear of the Inheritance Tax consequences, as Inheritance Tax is now governed by the test of Long-Term Residence instead.
Individuals who are trustees also need to be aware that a move to the UK can cause some offshore trusts to become UK resident for UK Income Tax and Capital Gains Tax purposes. This may not be immediately evident, particularly where a non-UK resident trustee is still in place. However, where there is a mixed body of trustees (at least one UK resident and at least one non-UK resident), the trust will be treated as UK resident if the settlor was UK resident, ordinarily resident or domiciled in the UK at the time of the trust’s creation.
Bricks and mortar
If an individual intends to purchase residential property, timing can make a significant difference. The non-resident SDLT surcharge adds 2% to the rates otherwise payable on residential property in England, applying where the purchaser is not UK resident. On a £2 million purchase, that equates to an additional £40,000. It will therefore generally be advantageous to delay the purchase until the individual has become UK resident. However, if a purchaser becomes UK resident within a year of the purchase, they can reclaim the surcharge paid. UK residence for SDLT purposes follows a different test from that used for other taxes,, so it is worth taking advice at an early stage to ensure optimal tax treatment.
Ownership structures also warrant careful thought. Since 2017, holding UK residential property through an offshore company has lost much of its appeal: the Annual Tax on Enveloped Dwellings, the 15% SDLT rate on ‘enveloped’ purchases, and the extension of Capital Gains Tax to all UK residential property mean that corporate structures rarely make sense purely for tax purposes. There may still be valid non-tax reasons for using a company – facilitating joint ownership, succession planning, or maintaining privacy – though these should be weighed against ongoing compliance costs and reporting obligations.
From a practical perspective, those new to the UK property market should be aware that conveyancing here can be more uncertain than in many other jurisdictions. Until contracts are exchanged, either party can withdraw without penalty – ‘gazumping’ remains an occupational hazard. Building surveys and searches are the buyer’s responsibility, and ‘buyer beware’ still applies. For individuals accustomed to more regulated markets, a gentle warning about these quirks can help manage expectations.
Who’d have thought it?
We spent the years between 2017 and 2025 warning those born in the UK with a UK domicile of origin, who had moved abroad and acquired a non-UK domicile in the process but who were intending to return to the UK, about their IHT position on return. For them, they were only given a one UK tax year grace period before coming back within IHT on their worldwide estate. You may recall that these returning UK doms were known as ‘formerly domiciled residents’ and their lot was not a happy one.
In the new IHT regime of Long-Term Residency though, these individuals are often in a much better position. Provided their period of non-UK residency has been at least ten consecutive years, becoming UK tax resident again will not expose their non-UK assets to IHT until they have been UK resident for ten consecutive years or, where there have been years of UK residence within the previous 20 tax years, until they meet the ‘10 out of the previous 20 tax years’ test. This could provide a significantly longer window than the single tax year previously available.
Sometimes the news we have to tell isn’t all that bad.
