Most British citizens keep the full UK personal allowance against their remaining UK income even after they emigrate — but the UK still taxes rent, pensions and UK workdays. Foreign income drops away. Here is the full map of what stays and what goes.
The Rule: Non-Residents Pay UK Tax on UK-Source Income
Once you are non-UK resident under the Statutory Residence Test, the UK stops taxing your worldwide income and taxes only your UK-source income (GOV.UK: Tax on your UK income if you live abroad). That single shift is the whole point of becoming non-resident: your overseas salary, foreign dividends and foreign gains fall out of UK tax, while the UK keeps a claim on income that arises here. The trap is assuming "abroad" means "tax-free from the UK" — it does not, and the categories that stay taxable catch a lot of emigrants by surprise. This guide is the map. All figures are 2025/26 (thresholds frozen to 2028), and a double taxation agreement between the UK and your new country usually decides who taxes what where both could.
A Map of Your UK Income
Here is how the main income types are treated once you are non-resident:
| Income type | Still UK-taxable as a non-resident? |
|---|---|
| Salary for work physically done in the UK | Yes |
| Salary for work done abroad (even for a UK employer) | No, once non-resident |
| UK rental income | Yes — Non-Resident Landlord Scheme |
| UK private or workplace pension | Usually — unless a treaty/NT code moves it |
| UK State Pension | In principle — often covered by the allowance |
| UK dividends and interest | Usually no extra UK tax — "disregarded income" |
| Gains on UK residential or commercial property | Yes — report within 60 days |
| Gains on shares and other assets | No — unless you are temporarily non-resident |
| All foreign income and gains | No |
UK Employment: It Depends Where You Sit
Pay for duties you physically perform in the UK stays UK-taxable even after you become non-resident. Pay for work done abroad — including for a UK employer paying into a UK bank account — is outside UK tax once you are non-resident, though the days you spend working back in the UK need watching because they are apportioned and taxed. If you work remotely for a UK company from your new country, read our dedicated guide to working remotely abroad for a UK employer, which covers the workday split, National Insurance and the risks you create for the employer.
UK Rental Income
UK property income is the classic non-resident tax bill: it stays fully taxable in the UK wherever you live. Under the Non-Resident Landlord Scheme your letting agent (or your tenant, if the rent tops £100 a week) must deduct basic-rate tax at 20% before paying you, unless HMRC approves you to receive rent gross via form NRL1 — and either way you declare the profit on a Self Assessment return. The withholding is on rent, not profit, so it is often far more than your real bill; most overseas landlords file NRL1 early to avoid it. Our guide to UK tax for non-residents works through the scheme, the forms and the arithmetic in detail.
UK Pensions and the State Pension
UK pension income is generally UK-source and UK-taxable, but this is the area where double tax treaties most often intervene. Many treaties give your new country of residence the taxing rights over UK private and occupational pensions, in which case HMRC issues an NT ("no tax") code so the pension is paid gross and taxed where you live instead — you apply using form DT-Individual. Government service pensions usually stay taxable in the UK regardless. The State Pension is taxable in principle but frequently falls within the personal allowance; note separately that it is only uprated each year if you live in the UK, the EEA or a country with a reciprocal agreement — in places like Canada or Australia it is "frozen" at the rate you first drew it. Our retiring abroad guide covers pensions, uprating and QROPS transfers.
UK Dividends and Interest: the "Disregarded Income" Rule
This is the part most people get wrong, usually in their own favour. UK dividends and interest are technically UK-source and taxable — but non-residents benefit from a special limit on their UK tax, the disregarded income rule (ITA 2007; HMRC guidance at SAIM1170). Broadly, a non-resident's UK income tax liability is capped at the lower of two calculations: (a) the normal calculation, using the personal allowance; or (b) the tax on all your non-disregarded UK income (like rent) with no personal allowance, plus whatever tax was deducted at source from the disregarded income. Because UK banks pay interest gross and UK company dividends carry no withholding tax, the tax "deducted at source" on that investment income is usually nil — so a non-resident living off a UK share portfolio often pays no further UK tax on the dividends at all.
The trade-off is that the disregarded-income calculation strips out your personal allowance against the rest of your income, so it is not automatically better — HMRC applies whichever computation gives the lower total, and Self Assessment software does the comparison. It is genuinely valuable for non-residents with substantial UK dividends or interest and little other UK income, and it is a big reason a non-resident investor's effective UK tax rate can be far below a UK resident's on the same money. The rules are intricate; if your UK investment income is large, have the two computations run properly.
Capital Gains: UK Property vs Everything Else
For most assets, non-residents are outside UK capital gains tax — sell your UK-listed shares or your foreign holdings while non-resident and there is normally no UK CGT. The major exception is UK land and property. Since April 2015 non-residents have been taxable on gains on UK residential property, extended from April 2019 to all UK property and to shares in "property-rich" companies. You must report the disposal and pay any tax to HMRC within 60 days of completion, separately from your normal return, with residential-property gains taxed at 18% or 24% depending on your band. And beware the temporary non-residence rule: leave, realise a gain on an asset you already held, and return within five years, and that gain can be taxed in the UK in your year of return. Long-term movers escape it; five-year "tax holidays" often do not.
ISAs, the Personal Allowance and Loose Ends
A few practical points that catch leavers:
- ISAs: you can keep an existing ISA, but you cannot pay new money in once you stop being UK resident. The UK tax-free wrapper also does not bind your new country — many countries tax the income and gains inside an ISA as if the wrapper did not exist.
- Personal allowance: you keep the £12,570 allowance against UK income if you are a British citizen, an EEA national, a current or former UK government employee, or a resident of a treaty country that grants it (GOV.UK). It still tapers away above £100,000 of income.
- Keep filing. Non-residents with UK rental income, UK gains or a personal-allowance claim almost always still need a Self Assessment return, with the residence pages (SA109) attached.
Two systems, one income. "Not taxable in the UK" does not mean "not taxable anywhere" — your new country may tax the very income the UK lets go, and vice versa. The double taxation agreement between the UK and your destination decides who taxes what and gives credit for the other, so plan both sides together rather than assuming leaving the UK ends the matter.
Frequently Asked Questions
Do I still pay UK tax if I live abroad?
Only on UK-source income once you are non-resident. That mainly means UK rental profit, most UK pensions, pay for work physically done in the UK, and gains on UK property. Your overseas salary, foreign investments and foreign gains fall outside UK tax — and UK dividends and interest are usually covered by the disregarded-income rule.
Do non-residents pay UK tax on dividends and interest?
Usually little or none. Under the disregarded-income rule, a non-resident's liability on UK dividends and interest is effectively limited to any tax deducted at source — and UK banks pay interest gross while UK dividends carry no withholding, so that is normally nil. The trade-off is losing the personal allowance in that computation, so HMRC applies whichever calculation is lower.
Do I pay UK capital gains tax if I live abroad?
Generally only on UK land and property. Non-residents must report UK property disposals and pay any CGT within 60 days of completion. Gains on shares and other assets are usually outside UK CGT while you are non-resident — unless you are temporarily non-resident (five years or fewer) and return, when pre-departure gains can be taxed on your return.
Is my UK pension taxed if I retire abroad?
UK pensions are generally UK-taxable, but many double tax treaties move the taxing right to your country of residence, in which case HMRC issues an NT code and the pension is paid gross and taxed there. The State Pension is taxable in principle but often within the personal allowance — and it is only index-linked in the UK, the EEA and reciprocal-agreement countries.
Do I keep my UK personal allowance living abroad?
British citizens, EEA nationals, current or former UK government employees, and residents of certain treaty countries keep the £12,570 allowance against their UK income. Claim it via form R43 or the SA109 residence pages of a Self Assessment return. It still tapers away above £100,000.
Related Guides
Keep reading with these related guides and articles:
- How to Become Non-Resident for UK Tax — the residence test you must pass first
- UK Tax for Non-Residents — the Non-Resident Landlord Scheme, allowance and NT codes in depth
- Tax When Moving Abroad — P85 refunds and split-year treatment
- Retiring Abroad — pensions, State Pension uprating and QROPS
- Working Remotely Abroad — the UK-workday split and National Insurance
- All Tax Guides — the full guide library
Where You Become Resident: Compare the Tax
What the UK lets go, your new country may pick up. These comparisons show local take-home pay and any expat regime side by side with the UK:
- UK vs Cyprus — non-dom 0% on dividends and interest
- UK vs Malta — the remittance basis on foreign income
- UK vs Italy — the flat-tax regime for new residents
- UK vs UAE (Dubai) — 0% personal income tax
- All country tax comparisons — every destination we cover
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