Understanding when UK tax still applies to expats

For British nationals who have moved overseas, it may come as a surprise that UK tax obligations do not end simply by virtue of living elsewhere. HM Revenue & Customs (HMRC) continues to tax individuals on UK-source income—irrespective of where they reside globally. From rental yields and pension payments to capital gains and even UK-based freelance work, multiple income types remain subject to UK tax rules. As a result, many expats must still engage with the UK Self Assessment system annually, often navigating complex cross-border tax scenarios and time-sensitive filing requirements from thousands of miles away.

Under UK tax law, if you receive income from UK-based sources and are not taxed at source through PAYE or a withholding arrangement, you are generally required to file a Self Assessment tax return—even if you have no other UK tax obligations. This applies equally whether you reside in Australia, the UAE, Spain, or Singapore. Understanding the nuances of tax residency, double taxation treaties, and UK source rules is essential to avoid errors, penalties, or overpayment.

Types of UK income commonly taxed for non-residents

• Residential or commercial rental income from property in the UK

• Capital gains from the disposal of UK real estate or land

• Private pensions, annuities, or occupational pension schemes paid from the UK

• Self-employed income or consultancy services rendered in the UK

• Interest or dividends from UK-based bank accounts and investments

Non-residents are typically taxed only on their UK-source income, not their worldwide earnings. However, this income must still be properly declared using the SA100 form and relevant supplementary schedules—most notably SA105 for property income, SA106 for foreign income and tax relief claims, and SA109 to declare your non-resident status. Even where income is exempt under a double tax treaty, reporting is still required in order to claim that exemption.

Why residency status still matters even when abroad

UK tax residency is assessed each tax year using the Statutory Residence Test (SRT), a set of criteria that considers the number of days spent in the UK, employment patterns, and connections to the country. A misclassification can lead to significant tax exposure—such as HMRC treating you as UK-resident and assessing tax on global income. Even if you left the UK years ago, your tax obligations may persist if you maintain certain financial or personal ties, or return temporarily for work or family reasons.

• SA109 is essential to declare your non-residency or claim split-year treatment

• Non-residents are only liable for UK tax on income arising from UK sources

• The SRT is applied annually and is based on detailed statutory rules

• Double tax agreements can override domestic tax liabilities

• Residency status affects eligibility for capital gains and pension reliefs

Example: British landlord living in Portugal

Consider Sarah, a British citizen who relocated to Portugal in 2021 and became tax resident there under the Non-Habitual Resident (NHR) regime. Despite her non-UK residency, Sarah retains a rental flat in Manchester which generates £14,000 per year in rental income. Since this income is not taxed at source, she must register under the Non-Resident Landlord (NRL) Scheme and file an annual UK Self Assessment tax return. She completes the SA105 form to declare the rental income, deducts allowable expenses for maintenance and mortgage interest, and submits SA109 to confirm her non-resident status. Because she pays tax on the same income in Portugal, Sarah uses the UK-Portugal double taxation agreement to avoid being taxed twice by claiming relief on SA106.

Without proper filings and documentation, Sarah could be taxed incorrectly or face penalties. Moreover, had she sold the property during her non-residency, she would still be liable to UK Capital Gains Tax (CGT) on the sale and required to file a CGT return within 60 days. Understanding how UK tax rules continue to apply—despite her residence abroad—has allowed her to remain compliant while avoiding unnecessary tax burdens.

Conclusion: Compliance is not optional

Whether you own a buy-to-let property, receive pension income, or are planning to sell UK-based assets, understanding when and how UK tax applies is essential. Many British expats unintentionally underreport income or fail to file entirely, mistakenly assuming that living abroad exempts them from UK tax. In reality, compliance obligations persist as long as UK income is involved—and can become increasingly complex without professional oversight. Working with a tax advisor who understands the intersection of UK domestic rules and international tax treaties is the most effective way to stay compliant and avoid double taxation.

Filing your UK tax return from overseas and claiming reliefs

For British citizens living abroad, the UK Self Assessment system doesn’t disappear—it simply becomes more technical. Although the entire process can be managed digitally via HMRC’s online services or commercial software, the complexity increases when you factor in non-resident status, foreign tax credits, double taxation reliefs, and the specific rules governing UK-source income. Without a clear understanding of the relevant forms and tax treaties, many expats risk underreporting income, missing out on valuable reliefs, or filing late—each of which can trigger penalties or result in paying more tax than legally necessary.

Crucially, Self Assessment for non-residents is not simply about declaring your UK income—it’s about ensuring your filings correctly reflect your residency, apply the right treaty provisions, and take advantage of any exemptions or credits available. Even modest income from UK property or pensions can carry significant compliance obligations if not handled properly. Filing from abroad requires precision, planning, and ideally, support from software or advisors who understand international tax matters.

What expats must include in a Self Assessment

Non-residents who earn taxable UK income must file the SA100 form, accompanied by several supplementary pages based on their income sources and residency position. For example, SA105 is used to report property income and expenses. SA106 is required to claim foreign tax credits or relief under a double tax agreement. SA109 is essential for any taxpayer asserting non-residency or split-year treatment. If you’ve sold UK residential property, an additional Capital Gains Tax (CGT) return must be filed within 60 days of the transaction.

• Register for Self Assessment no later than 5 October following the end of the tax year in which you earned income

• Use SA105 to report rental profits and allowable deductions

• SA106 covers foreign income and claims for double tax relief

• SA109 is mandatory for declaring non-resident or split-year status

• Capital gains from UK property must be reported separately via a 60-day CGT return

Example: Self Assessment from Dubai with UK pension and property

James, a British expat based in Dubai, receives a private UK pension of £16,000 annually and also earns £9,200 in net rental income from a London flat. Although tax-resident in the UAE (which has no income tax), James is still required to declare his UK income through Self Assessment. He files SA100, includes SA105 for the rental income (with deductions for service charges and repairs), and attaches SA109 to confirm his non-resident status under the Statutory Residence Test. Since there is no double taxation agreement between the UK and UAE, no tax credit is available—meaning full UK tax applies. James files online using TaxCalc and opts to pay for a review by a UK-qualified tax advisor to ensure accuracy, all at a fraction of the cost of a full-service firm.

Choosing the right tools and advisors

Filing from abroad doesn’t mean you’re on your own. A number of HMRC-approved software solutions are fully capable of handling non-resident tax returns. TaxCalc is popular among professionals for its detailed, form-based approach and ability to handle complex tax documents and attachments. GoSimpleTax provides a more intuitive, question-driven experience and is ideal for users less familiar with Self Assessment terminology. Both support SA106 and SA109, making them suitable for most expat filings. For more bespoke needs—such as dual tax filings or relief claims under unusual treaty articles—engaging a tax advisor can provide clarity and assurance. Many offer remote, fixed-fee services tailored specifically for expats.

• TaxCalc is ideal for complex returns, especially with multiple schedules

• GoSimpleTax offers an easier learning curve for straightforward returns

• Look for tax advisors listed with the Chartered Institute of Taxation (CIOT) or ACCA

• Always request a fixed-fee quote and outline your income sources in advance

• Many UK-qualified expat advisors work across time zones via Zoom or secure email

Don’t overlook claimable reliefs

British expats often miss out on tax reliefs available to them—either through lack of knowledge or incomplete filings. Double tax treaties may allow you to exempt certain pension income, reduce withholding tax on dividends, or claim relief for tax paid in your new country of residence. These benefits must usually be claimed actively via SA106, and the taxpayer is responsible for ensuring their correct application. HMRC will not apply treaty benefits automatically. Equally, if your pension is taxed abroad under treaty terms, you may need to submit form DT-Individual to request exemption from UK withholding.

The message is clear: filing from abroad requires not only accurate reporting, but strategic use of available reliefs. With the right tools and informed support, expats can remain compliant while significantly reducing unnecessary UK tax exposure.

Avoiding costly mistakes and planning for the long term

Filing UK tax from abroad is not inherently difficult—but it is highly unforgiving of errors. A single missed form, an incorrect assumption about residency, or a failure to apply a tax treaty can result in penalties, double taxation, or years of unnecessary overpayment. British expats—particularly those with assets or pensions remaining in the UK—must take a more strategic view of their tax obligations, not just year to year, but across decades. Long-term tax planning isn’t just about compliance; it’s about preserving wealth, protecting estate value, and ensuring flexibility in retirement or repatriation.

Unfortunately, many common mistakes stem from well-meaning but incorrect assumptions. Some believe their UK pension is automatically exempt in their new country of residence. Others forget that UK rental income must be declared even if a letting agent handles it. A few rely on generalist UK accountants with little or no experience applying international tax treaties—often resulting in over-declared income or missed treaty reliefs. Errors like these are avoidable with the right tools, advisors, and long-term visibility.

Typical tax traps for British expats

• Assuming UK pensions are automatically tax-free abroad without applying the correct treaty article

• Failing to file the 60-day UK Capital Gains Tax (CGT) return after selling a UK property

• Not registering for the Non-Resident Landlord (NRL) Scheme, resulting in tax being withheld at source

• Using a domestic UK accountant unfamiliar with SA106 or SA109 and treaty-based exemptions

• Overlooking inheritance tax risks due to unclear UK domicile status or retained property

Case study: pension tax error in Canada

Alan, a British national who emigrated to Canada in 2015, assumed that his UK occupational pension was only taxable in the UK. For several years, he filed UK Self Assessments and paid tax on the income. However, under the UK–Canada tax treaty, such pensions are taxable only in Canada when received by a Canadian resident. By failing to apply the correct treaty provision and submit form SA106, Alan paid nearly £9,000 in unnecessary tax over a five-year period. Upon realising the error with the help of a cross-border accountant, he was able to amend previous returns and reclaim most of the overpaid tax—but only just before HMRC’s four-year refund window expired.

The lesson: don’t assume—verify. Each tax treaty is different, and benefits must be claimed explicitly via Self Assessment forms.

Future-proofing your UK tax position

Tax compliance is one thing; planning is another. As your financial life evolves overseas, so too will your exposure to UK tax. Even expats who’ve lived abroad for decades can remain within the UK tax orbit due to pensions, property, investments, or domicile status. By taking a proactive approach—especially around residency reviews, capital events, and estate structuring—expats can legally minimise their exposure and increase flexibility for the future. This is particularly relevant for those who may return to the UK later, or who wish to pass on UK-based assets to heirs.

• Reassess your UK tax ties annually using the Statutory Residence Test (SRT)

• Engage in forward planning before large sales or pension drawdowns

• Keep detailed records of SA100, SA105, SA106, SA109, and CGT filings for at least six years

• Maintain evidence of foreign tax paid in case of treaty-based relief claims

• Review your UK domicile status—especially if holding UK assets or considering IHT planning

In summary, expat tax compliance isn’t just about ticking boxes. It’s a moving puzzle—shaped by your evolving lifestyle, financial decisions, and cross-border obligations. The sooner you integrate tax strategy into your long-term financial thinking, the more options you’ll retain and the fewer costly surprises you’ll face down the line.