Understanding Tax Residency: What British Expats Need to Know
For many British expats, one of the most important financial questions is where you are tax resident. The answer determines which country has primary taxing rights over your income and gains and, in some countries, whether your net wealth falls within scope.
Tax residency is a complex area of cross-border financial planning. The UK applies the Statutory Residence Test. Many European countries weigh day counts, family ties, and economic interests. Elsewhere, including the US, Australia, Switzerland, and Hong Kong, approaches differ again.
Tax residence is not simply about counting days. Authorities may also consider where your family lives, where you own property, and where your professional activities are based. As a result, it is possible to meet the residency tests of more than one country at the same time. Where that happens, any applicable ¹tax treaty determines which country has primary taxing rights. With so many moving parts, a clear understanding of how residency is assessed in the UK and overseas is the foundation for effective planning and long-term financial security.
Why Tax Residency Matters
Tax residency sits at the heart of an expat’s financial position. It determines which country has primary taxing rights over your income and gains, and whether this extends to your worldwide wealth or only to locally earned income. For British expats, this can have a direct impact on salaries, bonuses, investment returns, rental income, and pensions.The complexity arises because residency rules are not uniform. The UK applies the Statutory Residence Test, while other countries apply their own criteria. It is possible to meet both countries’ domestic residency tests at the same time. In that case, the Double Taxation Agreement (DTA), if one exists, applies tie-breaker rules to decide your treaty residence and allocates primary taxing rights. You are not treated as tax resident in both countries for treaty purposes.
For expats who split time between the UK and another country, or who continue to hold assets across borders, understanding residency is central to preserving wealth and making financial planning decisions on the correct tax basis.
The UK’s Statutory Residence Test
The UK’s Statutory Residence Test (SRT) is the framework that decides whether you are UK resident for tax purposes. It applies to every individual, including British expats, and combines day-count thresholds with personal and economic connections to the UK.
The SRT has three key components:
- Automatic UK tests: You will normally be considered UK resident if you spend 183 days or more in the UK during a tax year, or if your only home is in the UK and it is available for your use.
- Automatic overseas tests: You will normally be considered non-resident if you work full-time abroad and spend fewer than 91 days in the UK in the tax year (with no more than 30 of those being UK workdays).
- Sufficient ties test: If your status is not clear from the automatic tests, HMRC looks at additional connections such as whether you have a home in the UK, close family living there, or employment ties. The fewer days you spend in the UK, the more ties you can maintain without becoming resident.
For many British expats, the sufficient ties test is where difficulties arise. Even a relatively short visit to the UK can shift the balance, particularly for those with property, family, or business interests still in place.
Understanding the SRT is essential for anyone aiming to maintain non-resident status. While the framework provides structure, its application can be nuanced, and keeping accurate records of travel and ties is essential to demonstrate your position with confidence.
Tax Residency in Key EU Jurisdictions
Across the EU, residency rules often share common themes, but each country applies its own criteria in practice. For British expats, this means that a move to continental Europe brings new residency considerations alongside the UK’s Statutory Residence Test.
While most EU countries apply a 183-day rule, residence can also be established by factors such as family, home, or economic centre. For expats, this means that simply tracking days is rarely enough, and personal and financial ties are often decisive.
Beyond the EU: Key Global Destinations
Outside Europe, countries apply very different approaches to determining tax residency. Some use detailed day-count rules, others focus on domicile or even citizenship, while Hong Kong applies a purely territorial system.
The table below compares some key destinations for UK expats:
Residency rules vary widely across jurisdictions. While some countries adopt strict day-count formulas, others place more emphasis on domicile, intent, or citizenship. For expats, this means that what triggers tax obligations in one country may be irrelevant in another. Coordinating these rules with the UK’s Statutory Residence Test is essential to avoid double taxation and ensure compliance.
Tax Implications of Residency
As the EU and global comparisons above highlight, residency rules differ widely, and these differences directly shape tax outcomes. For British expats, this often determines whether only local income is taxed, or whether worldwide earnings, gains and in some cases even holistic wealth are brought into scope.
- UK residents: Generally taxed on worldwide income and gains, although reliefs and double taxation agreements may provide offsets where income has already been taxed overseas.
- UK non-residents: Usually taxed only on UK-source income. The most common examples include rental income from UK property, UK pensions, or gains on UK land and property. Other offshore income typically falls outside the UK net but may be taxed in the country of residence.
- Meeting two countries’ tests: You may meet the domestic residency tests of both the UK and another jurisdiction at the same time. Where this occurs, any applicable Double Taxation Agreement (DTA) applies tie-breaker rules, typically considering your permanent home, centre of vital interests, and habitual abode, to determine your treaty residence and which country has primary taxing rights. You cannot technically be tax resident in two countries at once for treaty purposes.
In practice, the implications reach well beyond income tax. Differences in how jurisdictions treat pensions, investment portfolios and capital gains can create mismatches. Timing issues add further complexity, as the UK tax year runs from April to April, while many countries use a calendar year basis.
For British expats with property, assets, or business interests in more than one country, understanding these rules is central to structuring wealth efficiently and ensuring financial planning is based on the correct assumptions.
Maintaining UK Non-Residence
Many British expats seek to remain non-resident for UK tax purposes on a long-term basis. Doing so can prevent worldwide income and gains from falling back into the UK net, and your worldwide assets being included in the scope of UK Inheritance Tax (IHT). However, maintaining non-resident status requires more than simply keeping day counts under control.
Key areas to monitor include:
- Days in the UK: The Statutory Residence Test uses precise thresholds. Even a few additional days can alter your position, so accurate record-keeping is essential.
- UK ties: Property ownership, close family remaining in the UK, or business connections can all strengthen HMRC’s case for residency. These factors interact with day counts, which means expats with stronger UK ties often need to spend fewer days in the UK to remain non-resident.
- Returning to the UK: Moving back after several years abroad can immediately re-establish UK residency, depending on timing and ties. Planning the year of return carefully can help reduce unexpected tax exposure.
A common misconception is that avoiding 183 days in the UK automatically prevents residency. In practice, the rules are far more nuanced. Expats who split their time across multiple countries, or who retain strong links to the UK, need to be especially cautious.
The rules are detailed and fact specific. Maintaining non-UK residency usually requires ongoing monitoring rather than a one-time decision. For expats with complex financial or family arrangements, forward planning is often the difference between uncertainty and clarity.
Practical Steps for British Expats
For British expats, keeping on top of tax residency is not a one-off exercise but an ongoing process. The following steps can help reduce uncertainty and support better planning.
-
Track your time carefully
Keep a record of days spent in each country (including travel days). Retain boarding passes, flight confirmations, and accommodation records in case of future review. -
Understand your host country’s rules
Each jurisdiction has its own approach. Check whether residency is based on day counts, permanent home, family ties, or economic interests. -
Review Double Taxation Agreements (DTAs)
Review DTAs and their tie-breaker rules to confirm treaty residence where you meet two domestic tests, and to understand which country has primary taxing rights in your circumstances. -
Plan moves with timing in mind
The UK tax year runs April to April, while many countries use a calendar year. Relocating mid-year can have different consequences depending on timing. -
Factor in family and property ties
Retaining a home in the UK or having family members based there can affect your residency status even if your day count is low. -
Keep evidence relevant to tie-breakers
Examples include proof of permanent home (lease, deeds), where family/economic interests are centred (employment, business, schooling), and habitual abode/travel patterns (itineraries, boarding passes). -
Seek professional advice early
Rules are detailed and subject to interpretation. Obtaining advice before making significant moves or investments helps reduce the risk of unintended residency.
Making the Complex Simple for British Expats Worldwide
At Forth Capital, we specialise in helping high-net-worth (HNW) internationally mobile executives build, optimise, and protect their wealth - before, during and after a move abroad.
Tax residency is more than a definition; it determines how your income, gains, and wealth are taxed, and underpins every financial decision as a British expat. With mobility between countries and the risk of dual residency, clarity on your status is essential before making choices around pensions, investments, property, or relocation. Contact us today to arrange an initial consultation.
Mark Routen
Chartered Tax Advisor
As Forth Capital's Head of Tax, I provide tailored tax planning advice to high net worth international private clients. I help them understand their options, optimise their cross-border arrangements, and create a robust plan for their future.
Frequently Asked Questions
You can meet the residency tests of two countries at the same time. If a tax treaty exists, its tie-breaker rules determine one country as your treaty residence and which country has primary taxing rights, so you are not treated as tax resident in both countries for treaty purposes.
Not necessarily. While day count is a key factor, the Statutory Residence Test also looks at other ties such as family, property and business connections. Expats with strong UK links may need to spend fewer days in the UK to remain non-resident.
The year of return is particularly sensitive. Even partial years can trigger UK residency depending on your ties and timing. Reviewing the Statutory Residence Test before returning helps avoid unexpected liabilities.
No. While many do, several apply additional or alternative criteria. For example, Switzerland applies shorter day thresholds, and Hong Kong taxes on a territorial basis rather than on residency.
UK pensions are generally subject to UK tax, even if you are no longer resident in the UK. However, the way this income is treated can vary depending on double taxation agreements. In some cases, taxing rights may be allocated to your country of residence instead. Since the rules vary between countries and pension types, reviewing the tax treatment of your benefits before drawing income is essential.
This communication is for information purposes only and does not constitute financial, legal, or tax advice. All content is based on current UK legislation and is subject to change. All planning arrangements should be regularly reviewed in consideration of legislative updates. Pension regulation and tax treatment vary between jurisdictions. Any reference to UK or international pension rules is portrayed in general terms and is not intended to reflect individual circumstances. Any examples provided are hypothetical and for illustrative purposes only. Outcomes will differ based on individual circumstances and local law and regulation. Past performance is not a reliable indicator of future results. The value of investments can fall and rise, and you may not get back the amount originally invested. The application of double taxation agreements depends on personal circumstances and interpretation by local tax authorities. Acting without professional advice may lead to unexpected tax liabilities or residency issues. The information provided is general in nature and may not reflect local law in all jurisdictions. Local advice should always be sought.
Last updated 20 October 2025
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