Moving Back to the UK? Here’s How to Avoid a Nasty Surprise from HMRC

Returning to the UK after life abroad can feel like a fresh chapter: a new job, old friends, family close by. But if you get the timing wrong, HMRC might greet you with something unexpected,  a tax bill on income you thought was safe.

Many returning expats are caught off guard. They assume UK tax starts the moment they step back onto British soil. Unfortunately, it doesn’t work that way. Without proper planning, the UK can tax income you earned while still living overseas, just because of when (and how) you returned.

Guy Hilton, Chartered Financial Planner at Skybound Wealth Management, breaks down how to move back smartly and keep your pre-return wealth out of the UK tax net.

The UK Tax Year Is Where People Slip Up

The UK tax year runs from 6 April to 5 April. If you move back partway through the year and don’t qualify for special treatment, you could be deemed UK tax resident for the entire year, even if you were only back for a few months.

That can mean:

• Salary you earned abroad suddenly becomes taxable
• Dividends, bonuses, or capital gains fall into HMRC’s scope
• Withdrawals from offshore investments could face UK tax

It feels unfair. But it’s avoidable, if you plan properly.

The Lifesaver Rule: Split Year Treatment

Split Year Treatment (SYT) divides the UK tax year into two periods: one before you return, when you are considered a non-resident, and one after your arrival, when you become a UK resident. If you qualify for SYT, only the income earned after you become a UK resident is subject to taxation. Any income, gains, or pension withdrawals from your non-resident period remain exempt from UK tax.

However, SYT isn't automatic. To qualify, you must meet one of HMRC’s conditions, such as moving back permanently, starting full-time employment in the UK, returning with your family, or ending full-time work abroad. You'll also need to claim SYT in your Self-Assessment and provide evidence that you meet the necessary criteria.‍

Why April Matters: Timing Is Everything

While moving back before 6 April can work, it adds complexity if you don’t qualify for SYT. That’s why many expats choose to return after 6 April, so they start cleanly in a new tax year, reducing the chance of accidental residency and retroactive taxation.

The earlier you plan your move, the more flexibility you have.

Three Things You Should Do Before You Move Back

1. Wrap Up Overseas Income Early

If you're planning to sell property or investments, take a large bonus or payout, or draw from an offshore pension or savings plan, aim to complete these actions before you trigger UK residency. Once you return, even income from abroad can be subject to UK tax.

2. Review Offshore Investments and Pensions

You might currently hold offshore bonds or funds, regular savings plans, non-UK bank accounts, or UK pensions you’ve left untouched. Ask yourself whether these will still be efficient once you become a UK resident. Would it make sense to restructure, withdraw, or consolidate them before you return?

For example, under current rules, non-residents may be able to withdraw their entire pension pot tax-free, but once you become a UK resident again, that option disappears quickly. Getting this right could mean the difference between making efficient withdrawals and facing unnecessary tax.

3. Don’t Accidentally Trigger UK Residency Early

Just because you “move back” on a certain date doesn’t mean HMRC agrees. Under the Statutory Residence Test (SRT), you might already be classed as UK-resident if you:

• Spent too many days in the UK recently
• Have a spouse or child already living there
• Maintain a UK property or work contract
• Visited frequently for business or family reasons

We’ve seen clients unknowingly trigger residency months before they thought they had. That’s why it pays to review your travel calendar and personal ties well in advance.

Come Back on Your Terms - Not HMRC’s

Returning home can be emotional, exciting, and sometimes overwhelming. However, one misstep could undo years of careful financial planning abroad. With the right strategy, you can minimise or eliminate UK tax on income earned overseas, protect and restructure your offshore savings, and plan your pension access wisely. It’s also important to avoid HMRC penalties and reduce paperwork headaches, ensuring you set yourself up for financial confidence in your new chapter in the UK.

If you’re thinking of returning to the UK, don’t leave it to chance. Plan ahead. Book a confidential planning session and get tailored advice on how to structure your return; tax-smart, smooth, and fully in control.