Moving Back to the UK

Introduction

Most British expats leave the UK without a plan for returning.

It’s normal.
Life moves on.
You build a career abroad.
You settle into a new culture.
You feel disconnected from UK tax - comfortably distant.

But return decisions are rarely purely financial. They are emotional: ageing parents, children’s schooling, divorce, a new partner, a new job, burnout abroad, or simply wanting to come home.

When life pulls you back, tax rarely takes centre stage — until it does. Because returning to the UK is not a simple reversal of leaving. It can change your residence position, alter the scope of UK tax on foreign income and gains, and create reporting and compliance obligations that did not exist while you were overseas.

The post-6 April 2025 landscape also matters. The remittance basis has been replaced by a residence-based system with a four-year FIG regime for qualifying arrivals, and the scope of inheritance tax on non-UK assets now depends on long-term UK residence.

This guide explains the real traps returners face, the mechanics behind them, and the practical steps people use to reduce avoidable tax exposure.

The One Thing Nobody Tells British Expats

Here is the single, brutal truth: The UK taxes on a tax-year basis, not a “date you come home” basis.

Meaning:

The UK taxes by tax year (6 April to 5 April). Your return date matters, but it does not work like a simple “UK tax starts on the day I arrive.” The key question is whether you are treated as UK resident for the tax year, and if so whether split-year treatment applies to limit the period of UK residence within that year. If split-year does not apply, UK residence can apply for the whole tax year, which is where the unexpected “full-year” outcomes come from.

That can bring into scope foreign income and gains you mentally file as ‘pre-return’ where you are treated as UK resident for the tax year and split-year does not apply (or where specific UK rules apply regardless of residence). It’s not your flight date that matters — it’s your residence position for the tax year, whether a split-year case applies, and then how the relevant UK charging provisions apply to the specific income or gain.

This hits hard.

I’ve seen people, who thought they were compliant, end up with £40k, £80k, even £150k tax bills on income earned before they even landed at Heathrow.

Why?

Because they triggered UK residency at the wrong time.

The Statutory Residence Test (SRT) – Why Returners Become Resident Earlier Than Expected

Most British expats underestimate SRT on re-entry.

The Statutory Residence Test (SRT) is mechanical, but it catches returners because UK ties reappear quickly.

In broad terms, residence is determined by applying the SRT for the tax year as a whole: the automatic UK tests, the automatic overseas tests, and if neither applies, the sufficient ties test.

The returner trap is that ties can stack quickly - accommodation becomes available, work resumes, family returns, and prior UK presence can create a 90-day tie. The result is that a returner can become UK resident on a much lower day count than they expect. The exact day threshold depends on whether you are an ‘arriver’ or ‘leaver’ for SRT purposes and which ties you actually meet in that tax year.

Split-Year Treatment: Why It Often Fails for Returners

Most returners assume split-year will automatically protect them.

It doesn’t.

Split-year treatment is what many returners assume will protect them - but it is not automatic. It only applies if you fall within one of the statutory split-year cases, each with its own detailed conditions.

In practice, split-year often fails because the move back is messy: UK accommodation is available early, UK work starts earlier than planned, overseas employment or residence does not end cleanly, families move on different dates, or travel patterns blur the transition. When split-year does not apply, the risk is not “a small adjustment” - it can be full-year UK residence for tax purposes.

For most people, the correct answer comes from mapping the tax year day-by-day against the SRT, then testing whether a statutory split-year case applies.

The Worldwide Income Trap (The Most Expensive Mistake in the Entire Return Journey)

Imagine this scenario:

You move back on 1 March.
You assume the UK will tax you from that date forward.

But if, applying the SRT, you are UK resident for the tax year and no split-year case applies, then worldwide income and gains for that tax year can fall within UK tax (subject to reliefs and treaty interaction where relevant).

Examples:

• You received a large bonus overseas in June
• You vested RSUs abroad in August
• You sold a property abroad in October
• You took a pension lump sum abroad
• You sold a business abroad earlier that year

In those circumstances, worldwide income and gains can be in scope, subject to domestic rules, reliefs, and treaty interaction where relevant.

That can pull into scope items people mentally label as “earned abroad”, including overseas salary and bonuses, investment income, foreign property gains, equity vesting linked to overseas duties, pension receipts, and certain trust or offshore structure outcomes — depending on the facts and the relevant UK charging provisions.

The expensive cases are rarely about one big mistake. They are usually about an incorrect assumption: “tax starts when I land” or “split-year will sort it out”.

This is why return planning is not optional - it is essential.

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Offshore accounts and record-keeping

Offshore accounts are not automatically “toxic” on return. The risk is usually evidence and classification, not the mere fact you moved money.

For many returners taxed on the arising basis, UK tax is driven by whether the income and gains arose in a year you are UK resident, not by whether you later transfer cash to the UK. In other words, HMRC does not normally impose UK tax solely because cash is transferred to the UK where a person is taxed on the arising basis—the tax point is typically the income/gains arising (and the year of residence) rather than the movement of cash. (Different considerations apply where remittance concepts, anti-avoidance rules, or trust matching rules are in play).

Offshore accounts become far more sensitive where any of the following are relevant:

• you previously claimed the remittance basis (pre-6 April 2025), meaning historic mixed-fund, ordering and tracing issues may still matter for remittances made during that period, and for later evidence/analysis (for example, when supporting filings, corrections or claims);
• you are claiming (or assessing eligibility for) the 4-year foreign income and gains (FIG) regime from 6 April 2025, where eligibility, claims and record-keeping determine which foreign income/gains are within the regime;
• you have complex offshore investments, trust distributions, foreign currency transactions, or years of historic activity where it is genuinely difficult to evidence what arose, when, and how it should be reported.

Transitional rules and legacy remittance-basis issues can still matter, particularly where funds were structured or remitted under earlier rules.

The practical takeaway is simple: offshore accounts often contain years of transactions. If you cannot evidence what is capital versus income versus gains - and which tax year each item arose in - you increase the chance of misreporting, missed claims, and disputes.

Pensions: The Most Dangerous and Misunderstood Area for Returners

Many expats assume:

“My pension is taxed where I live now.”

Not when you return.

Pensions are one of the most misunderstood areas for returners because the UK tax treatment depends on what pension it is, what payment it is, when it is taken, and your residence position for that tax year.

Once you are UK resident, the UK will often tax pension income under domestic rules, but outcomes can differ for:

• UK registered schemes versus overseas arrangements,
• periodic income versus lump sums,
• QROPS and other recognised transfers, and
• situations where treaty provisions affect taxing rights or relief.

The most common trap is timing. A lump sum taken ‘before returning’ can still fall into UK tax if it is taken in a tax year for which you are UK resident and you are treated as UK resident for the full tax year (because no split-year case applies). The outcome then depends on the pension type, the nature of the payment, and any relevant treaty/relief position.

CGT Traps: Selling Assets Too Close to Return

Many expats might sell:

• a foreign property
• a foreign business
• shares
• crypto
• investments

right before moving back.

Capital gains tax issues on return usually come down to timing and residence for the tax year. If you are UK resident (and split-year does not limit the period), the UK can tax worldwide gains, subject to domestic rules and reliefs.

The returner pitfalls include:

• disposals in a tax year where UK residence applies unexpectedly,
• assumptions that “selling before the flight” means “outside UK tax”, and
• missing UK rules that can apply even to non-residents in some cases (for example, certain UK property disposals).

For anyone who has been non-resident and is returning, it is also important to consider the UK’s temporary non-residence rules, which can bring certain types of income and gains realised during a period of non-residence back into charge when UK residence resumes, depending on the length of absence and the type of receipt/disposal.

Trusts and Offshore Structures: Why Returns Change the Analysis

Trusts and offshore structures are high-risk on return because UK outcomes depend on residence, the nature of any benefits/distributions, the settlor/beneficiary position, and detailed matching and reporting regimes. From 6 April 2025, long-term UK residence is also relevant for the IHT scope on non-UK assets, which can change the risk profile when UK residence is re-established.

If you:

• are a settlor
• are a beneficiary
• have control
• receive distributions
• use underlying companies
• return to the UK unexpectedly

then a return to UK residence can change how UK tax and reporting rules apply to benefits, distributions and underlying income/gains.

The practical risk is not that “all trusts become taxable.” The risk is that a return can change which UK regimes apply, trigger reporting obligations, and bring distributions or benefits within UK tax rules depending on the structure and your relationship to it.

The New 10/20 Residence-Based IHT Rule: The Returner’s Curse

From 6 April 2025, the UK’s inheritance tax scope for non-UK assets depends on whether someone is a long-term UK resident — broadly, UK resident for 10 out of the previous 20 tax years. Where that test is met, non-UK assets can fall within the UK IHT net on death and on certain chargeable transfers, subject to the detailed rules and any transitional provisions.

A key returner point is that the test looks back across years. Many expats who left the UK after a long period of residence may be closer to the threshold than they realise when they return.

Case Studies (Real Expat Return Failures)

Case Study 1 – The February Returner Who Assumed “Tax Starts When I Land”
A returner came back in February and began rebuilding UK ties quickly (UK accommodation available, work restarted, and significant UK presence). Split-year was assumed, but the statutory split-year conditions were not met. The result was UK residence for the tax year, bringing overseas employment income and other foreign income into UK reporting and, potentially, UK tax, subject to relief and treaty interaction where relevant.

Whether the UK tax cost is material depends on the income profile, available reliefs and treaty position — the technical failure here is relying on split-year without meeting a statutory case.

Case Study 2 – The Property Sale That Fell Into the Wrong UK Tax Year
A foreign property was sold in a tax year where the individual was treated as UK resident (and split-year did not apply). The gain was therefore within the scope of UK CGT on worldwide gains, with credit relief dependent on foreign tax paid and timing. The surprise was not “HMRC taxed a foreign property for no reason” — it was that the disposal fell into a year where UK residence applied.

Foreign tax credit relief is fact-dependent and can be affected by timing, classification and local rules.

Case Study 3 – The Business Owner With a Disposal and a Return in the Same Tax Year
A business disposal occurred in a year where UK residence applied unexpectedly. The disposal proceeds were reported overseas, but the UK position also required reporting because residence brought worldwide gains into scope. The real cost came from misaligned tax years, late planning, and the cash-flow impact of paying tax in different jurisdictions at different times.

The point is not that disposal proceeds are ‘double taxed by default’, but that return timing can create overlapping reporting and cash-flow pressure if not planned.

Case Study 4 – The Pension Lump Sum Taken in a “Return Year”
A pension lump sum was taken during a tax year where UK residence applied, contrary to the individual’s assumptions. The UK tax outcome depended on the nature of the pension, the type of payment, and whether split-year applied. The avoidable mistake was taking a large, irreversible pension event without first mapping residence status for the whole tax year.

The UK treatment of lump sums can vary by pension type and classification, which is why residence mapping should happen before an irreversible event.

Return Timing: Why It Can Change the Outcome

This is where returners can reduce avoidable risk:

Timing matters because the UK tax year runs from 6 April to 5 April. Returning close to the end of a tax year can increase complexity and the risk that residence applies for a year you assumed was “mostly overseas,” particularly where split-year conditions are not met.

Returning early in a tax year can sometimes be simpler administratively because the facts align more naturally to a single tax year. But the ‘best’ timing depends on what income, disposals and pension events you expect - and which split-year case (if any) you can actually satisfy.

The Step-by-Step UK Return Plan

A Return Checklist (Educational, Not Personal Advice)
Returning expats typically benefit from mapping these items before the move:

1. Residence position for the whole tax year under the SRT (not just the arrival date).
2. Whether split-year treatment is realistically available, and which statutory case it would fall under.
3. Planned income and gain events (bonuses, vesting equity, property or business disposals, large dividends, crypto).
4. Pension events (income versus lump sums; UK schemes versus overseas arrangements; treaty interaction where relevant).
5. Offshore accounts and documentation, particularly where historic income/gains, complex investments, or prior remittance basis/FIG issues may be relevant.
6. Trusts and offshore structures (roles, powers, benefits, reporting, and how a return changes the UK analysis).
7. IHT exposure under long-term UK residence rules and how prior UK residence years affect the look-back test.
8. National Insurance position, including voluntary contributions and any announced changes affecting people abroad (for example, recently reported/announced proposals affecting voluntary contribution categories for people abroad), noting that eligibility depends on individual circumstances and the rules in force at the time.

The goal is not perfection - it is avoiding irreversible transactions (large disposals, pension events, distributions) in a tax year where residence treatment is uncertain.

Conclusion

Returning to the UK is emotional.
It’s personal.
It’s often sudden.
And it’s driven by life - not tax.

But tax doesn’t care.

It doesn’t care why you left.
It doesn’t care why you’re returning.
It doesn’t care what happened abroad.
It doesn’t care how hard you’ve worked.
It doesn’t care about your intentions.

Tax cares about rules.
Days.
Ties.
Patterns.
Timing.
Documentation.

And those rules can punish returning expats brutally if they don’t plan ahead.

The good news?

Many of these traps can be reduced or avoided with careful planning, clean documentation, and - where appropriate - personalised advice based on your facts.

If you’re moving back to the UK, now or in the next few years:

Do not wait until you’ve already landed.
Plan now, while you still control the outcome.

This article is provided for general informational purposes only. It does not constitute tax advice, financial advice, legal advice, or a recommendation to take (or refrain from) any action. Tax outcomes depend on individual circumstances, the precise facts, and the law and HMRC practice at the relevant time. No reliance should be placed on this article as a substitute for obtaining personalised advice from a suitably qualified professional. No professional relationship is created by reading or relying on this content.