The 3 questions you need to ask yourself if you're considering returning to the UK

Insight | by Stephen Kiggins

For British expatriates contemplating repatriation, the decision to return to the UK extends beyond logistical and emotional considerations.

The financial implications, particularly concerning tax and the management of your investments, assets and pensions, are potentially complex and necessitate meticulous planning.

At Forth Capital, we pride ourselves on making the complex simple - specialising in helping internationally mobile professionals take control of their cross-border financial planning. So, if you're considering returning to the UK, we've highlighted three key questions you need to ask yourself, to help you protect your assets, your long-term financial freedom, and your peace of mind.

1. What are the UK tax implications of my return?

It’s essential to understand how the income, assets and gains accrued whilst you’ve been abroad could be taxed on your return to the UK.

Re-establishing your UK residence [and ‘long-term UK residence’¹] determines your exposure to UK taxation, including income tax of up to 45% (and up to 48% in Scotland), capital gains tax (CGT) of up to 24%, and inheritance tax (IHT) of 40% on your global assets – and returning to the UK within five years of departure can trigger retrospective taxation (under HMRC’s ‘temporary residence rules’²) on previously untaxed income and gains.

If you are returning after a period of ten or more consecutive tax years of non-UK residence you will be granted 'Qualifying New Resident' (QNR) status, enabling you to benefit from a new regime for ‘foreign income and gains (FIG)’³ [applicable from 6 April 2025], facilitating UK tax relief on profits from trades outside the UK, profits and dividends from non-UK resident companies, and interest paid from foreign bank accounts, accrued during the first four (tax) years of your return to UK residence.

Timing your return can significantly influence your tax obligations. Returning at the start of a tax year (April 6) can simplify tax affairs, but if you return mid-year you might qualify for ‘split-year treatment’⁴, where only income earned after your return is subject to UK tax.

Action Points

Confirm your residence status using the UK Statutory Residence Test (SRT) and ‘long-term UK residence’ criteria.
Consult with a dual qualified international financial planner and tax expert to discuss your specific circumstances and residence status, to determine your tax liability - and whether your return to the UK could potentially trigger retrospective taxation on previously untaxed income and gains and expose your global assets to UK inheritance tax.

2. How should I manage my overseas assets and investments?

During your time abroad, you've likely built a significant portfolio of international assets. Returning to the UK makes these subject to stringent tax scrutiny.

Disposing of assets post-return, can trigger significant UK CGT liabilities, at a taxable rate of up to 24%.

Additionally, offshore investments such as foreign bonds or investment funds could incur UK income tax charges if not managed properly.

Strategically managing asset restructuring and disposals before resuming UK residency can dramatically reduce your tax liability and safeguard your accumulated wealth.

Action Points

In advance of your return, undertake a thorough review of your international assets and investments to identify your potential tax exposure.
Engage a dual qualified international financial planner to restructure your assets and minimise your tax liabilities.

3. How will returning to the UK affect my pensions and estate planning?

Returning to the UK can have significant consequences for your pension arrangements and estate planning – each of which therefore require detailed review and re-assessment.

If you have an overseas pension scheme (either through an employer or privately), it’s important to assess how your foreign pension schemes and any future withdrawals will be treated in the UK.

Inheritance Tax (IHT) becomes particularly critical upon your return. Charged at up to 40% of the value of your estate above the ‘nil rate band’⁵ thresholds, your non-UK worldwide assets will be included in your estate and liable to IHT if you re-establish ‘long-term residence’¹ in the UK. Careful consideration of your estate planning is crucial therefore to avoid significantly diminishing your family’s inheritance.

Action Points

If you hold an overseas pension or transferred your pension overseas while living outside the UK, you should consider whether each of your current pension schemes will remain tax-efficient upon your return to the UK. A dual qualified international financial planner and pension expert can help you undertake this review and advise you accordingly.
Consult with a qualified financial advisor to re-evaluate your estate planning, with consideration given to establishing insurance policies and appropriate trusts, and adopting lifetime gifting and pension drawdown strategies to protect your wealth from significant IHT exposure.

With you every step of the way

Repatriating to the UK is a significant transition and one that has to be approached with detailed foresight and professional guidance.

To build a repatriation plan that protects your long-term financial freedom and your peace of mind, contact us to schedule an initial consultation.

¹ HMRC Long Term Residence Test - IHTA84/S6A
² HMRC Temporary non-residence and Capital Gains Tax - HS278
³ HMRC Foreign income and gains regime - FIG
⁴ HMRC Statutory Residence Test split year treatment - RFIG21030
⁵ HMRC Inheritance Tax - IHT

This communication is for information purposes only and does not constitute financial, legal, or tax advice. Please schedule a meeting to receive advice on international financial planning and wealth management.