UK Autumn Budget 2026: 7 Tax Changes British Expats Need to Know Before 28 October

Take a British couple who moved to Dubai three years ago after 25 years in the UK. Their £600,000 UK pension is the money they never plan to spend: the pot that is "for the children". Their home, investments and savings use up the inheritance tax nil-rate bands. And because they spent so long in the UK, their worldwide estate is still within UK inheritance tax for years to come.

From 6 April 2027, if the survivor dies after age 75 with that fund untouched, two-thirds of it can go in tax before the children receive a penny. Inheritance tax at 40% comes first. Income tax at the children's own rate is then charged on what is left.

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None of that depends on a new announcement on 28 October. It is already legislated.

That is the point most Budget previews miss for internationally mobile families. Every autumn the rumours run hot, and every autumn people make irreversible decisions on the strength of them. Budget day matters. But for British expats, many of the most expensive changes of the next few years have already been decided, and the preparation should start there.

The Budget radar: rumour, announced or law?

Before deciding anything, put each headline in one of three boxes. Only the last two should change a plan today.

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Pensions: the 67% question

For a generation, the standard advice was to spend everything else first and leave the pension until last, because it sat outside the estate. From 6 April 2027 that logic flips. Most unused pension funds and death benefits will count towards the estate for inheritance tax. Death-in-service benefits and dependants' scheme pensions are excluded, and the spouse and civil partner exemption still applies (with a cap for some cross-border couples). Personal representatives become responsible for reporting and paying the tax, with beneficiaries also liable, so the family needs to know where every pension is.

Where you live matters, but not in the way many expats assume. UK registered pensions are in scope wherever you live. Qualifying overseas schemes, including QROPS, are caught only where the member is a long-term UK resident. HMRC has said further guidance on non-resident situations is due this autumn, so treat any firm conclusion on overseas schemes as provisional until it arrives.

The tax-free cash rumour. No cut to the tax-free lump sum has been announced. Today you can usually take up to 25% tax-free, capped at £268,275 across your pensions, subject to any protections. Drawing it early "just in case" can backfire. "Tax-free" in the UK is often taxable in your country of residence, as it is in Spain and France. And the cash leaves a pension wrapper only to sit in your estate instead.

What to do instead: model the order in which you draw on pensions and other assets, check every nomination, and run the numbers for both spouses. The aim is to decide deliberately, not to react.

Investments: what you keep, not what you pay

Capital gains tax is the most talked-about lever. Aligning CGT with income tax rates has been floated. CenTax, a research centre, estimates that equalising the rates could raise around £14 billion a year, although others warn that higher rates could cut revenue as people sell less. Remember October 2024: CGT rates rose on Budget day itself, with no notice.

That cuts both ways. If a sale was already planned for good reasons, its timing deserves a conversation now. But selling on a rumour swaps an uncertain future tax for a certain one today, and can unpick a portfolio built for the long term.

For non-residents, UK CGT generally reaches only UK land and property. The bigger risk is a return to the UK. Under the temporary non-residence rules, if you come back within five years, certain gains and income realised while you were away can be taxed in the year you return. For many expats, the date they come home matters more than any CGT rate.

Income is already changing. Dividend rates rose to 10.75% and 35.75% in April 2026, and savings income rates rise to 22%, 42% and 47% from April 2027. Non-residents' UK liability on savings and dividends is often limited by special rules and tax treaties, so the headline rate is not the full story.

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Property: the price of a UK foothold

Rental income. From 6 April 2027, non-resident individual landlords pay new property income rates of 22%, 42% and 47% on UK rental profits. That is an extra £200 of tax for every £10,000 of taxable profit, before any Budget changes.

High-value homes. The High Value Council Tax Surcharge on English homes worth £2 million or more is planned from April 2028, and there are press reports that the threshold could fall to £1.5 million. Owners, not occupiers, are liable, wherever they live. The government's consultation also asked whether non-UK-resident owners should pay an extra premium.

Selling. Non-residents must report the sale of UK property to HMRC within 60 days of completion, even if no tax is due. Missing the deadline brings penalties that are entirely avoidable.

Buying before you return. Buy a home in England or Northern Ireland before you are back and you may pay a 2% non-resident surcharge on top of the usual stamp duty, plus the higher rates if you still own a property elsewhere. The surcharge can be reclaimed if you spend at least 183 days in the UK within a set window around the purchase, so the order of moving and buying matters.

And moving property into a company is rarely the quick fix it is sold as. It can trigger CGT and stamp duty on the way in.

Inheritance tax: the ten-year shadow

Since April 2025, UK inheritance tax has followed residence, not domicile. If you have been UK resident for at least 10 of the previous 20 tax years, you are a long-term UK resident and your worldwide estate is in scope. That status does not end when you board the plane:

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Couples where only one partner is a long-term UK resident need a specific check. If that partner dies first, the spouse exemption on what passes to the survivor is capped at £325,000 unless an election is made, and the election has consequences of its own.

On top of that sit the Budget rumours: changes to gifting rules, and a social care levy on estates, which the Prime Minister has proposed in the past (though most commentators expect nothing on social care until the review reports in 2027). The nil-rate band has been £325,000 since 2009. Add pensions from 2027, and the question for many families is no longer whether there will be a bill, but how the family will pay it, and from which assets.

An accurate residence history, year by year, is now the single most useful document in an expat's estate plan.

Coming or going: timing beats the Budget

If you are planning to leave, the rumoured CGT exit charge is only a rumour. But the inheritance tax tail above is real, and your departure date determines when it starts to run.

If you are planning to return, the four-year foreign income and gains regime can exempt eligible foreign income and gains after at least ten consecutive tax years of non-residence. It is not automatic: it needs a claim, does not cover everything, and costs you the personal allowance and CGT annual exemption for each year you claim. Combine that with the temporary non-residence rules, the stamp duty surcharge and the split-year rules, and it is clear that your arrival date can be worth more than anything announced on 28 October.

The change most expats missed: your State Pension top-up

Since 6 April 2026, expats can no longer pay voluntary Class 2 National Insurance to fill gaps in their UK record. Class 2 was generally open to those working abroad, and the only route now is Class 3, at £18.40 a week this year. For those who used Class 2, that is about £957 a year, against about £190. New applicants abroad must also show either 10 years' continuous UK residence or 10 years of contributions, up from three.

Two points soften the blow. Gaps before April 2026 can still be filled under the old rules, within the usual time limits. And with the full new State Pension at £241.30 a week, each extra qualifying year adds around £358 a year to your pension, so even at the new price a top-up can pay for itself within three years of drawing. One caveat: in some countries, including Australia and Canada, the UK State Pension is frozen at its starting rate, which changes the maths.

Five no-regret moves before 28 October

1. Write down your residence history. Every tax year in or out of the UK for the last 20 years. It drives your inheritance tax status, the foreign income and gains regime and the temporary non-residence rules.
2. Run the 2027 pension numbers. What would each pension be worth to your family after inheritance tax and income tax? Are the nominations up to date?
3. Know your gains. Base costs and unrealised gains on UK property and investments, so you can act quickly if rates change.
4. Check your National Insurance record. Pre-April 2026 gaps may still be filled on the old terms, within the time limits.
5. Set your triggers now. Agree in advance: "If X is announced, we will do Y." Then on 29 October you act on the detail, not the headlines.

Key dates

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