United Kingdom

Residence (SRT), FIG regime, Income Tax, capital gains, companies, VAT, SDLT, ATED, long-term residence IHT and the France-UK treaty.

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TAX FACTSHEET · 2026-09-26

In this factsheet

Personal and business taxation in the United Kingdom

Documentary position as at 26 September 2026. The figures given relate in principle to the UK tax year 2026-2027 (6 April 2026 – 5 April 2027) for Income Tax, National Insurance contributions and Capital Gains Tax, and to the financial year beginning on 1 April for Corporation Tax; any other reference year is indicated.

1. Identifying the territory, the year and the applicable regime

1. The United Kingdom comprises England, Scotland, Wales and Northern Ireland, but it is not a uniform tax bloc. The tax year for individuals runs from 6 April to 5 April; the current year at the date of this factsheet is the 2026-2027 tax year. Income, a gain or a departure must therefore be allocated to a UK tax year before any calculation is made, and that year does not coincide with the French calendar year. S06

2. A taxpayer who lives in Scotland pays Scottish Income Tax on wages, pensions and most other taxable income, under a separate scale comprising six rates above the Personal Allowance. Dividends and savings interest, by contrast, remain subject to the rates that apply in the rest of the United Kingdom. The English scale set out below therefore does not apply to a Scottish taxpayer's earned income. S07

3. Taxes on property transactions are also territorial. The Stamp Duty Land Tax (SDLT) described in this factsheet applies to England and Northern Ireland; the non-resident surcharge does not apply to purchases in Scotland or Wales, which have their own land transaction taxes, not quantified here. S17 S19

4. The period is decisive for the reform of the taxation of non-domiciled individuals. Since 6 April 2025, the domicile test has been replaced, for the most part, by tests based on tax residence: the four-year foreign income and gains (FIG) regime, the reform of Overseas Workday Relief and liability to Inheritance Tax according to long-term residence. The Finance Act 2025 contains these changes. A situation predating 6 April 2025 must therefore be analysed under the former law, including for the remittance basis. S04 S33

5. The Finance Act 2026 subsequently changed several parameters: an increase in the dividend rates, the creation of separate rates for property income, the reform of agricultural and business property relief for Inheritance Tax and the inclusion of certain pension rights in the estate for Inheritance Tax. The effective dates of these measures differ; they are specified in the relevant sections and must not be applied retrospectively to an earlier year. S42 S34 S25 S26

2. Individual residence, arrival and departure

6. Since the 2013-2014 tax year, the tax residence of an individual has been determined by the Statutory Residence Test (SRT) in Schedule 45 to the Finance Act 2013. The test applies tax year by tax year and combines automatic overseas tests, automatic UK tests and a sufficient ties test. Nationality, immigration status or declared intention do not replace this statutory analysis. S01 S02

7. A day counts in principle as spent in the United Kingdom if the individual is present there at the end of the day. Two exceptions are provided for: mere transit, where the individual arrives as a passenger and leaves the next day without engaging in activities substantially unrelated to that passage, and exceptional circumstances beyond the individual's control that prevent departure, where the individual intends to leave as soon as those circumstances permit; this second exception is capped at 60 days per tax year, subsequent days being counted as spent in the United Kingdom. A deeming rule also applies to an individual who has at least three UK ties, was resident in at least one of the three preceding tax years and has more than 30 days of presence without being present at the end of the day: after the 30th, each of those days is counted as spent in the United Kingdom. S01

8. The automatic overseas tests take priority when they are met. In particular, an individual is non-resident if they were resident in one or more of the three preceding tax years and spend fewer than 16 days in the United Kingdom in the year, or if they were non-resident in each of those three years and spend fewer than 46 days there. A third test concerns full-time work overseas, with fewer than 91 days in the United Kingdom and fewer than 31 days on which more than three hours are worked in the United Kingdom, and without a significant break from overseas work, a break of 31 days or more without any day on which more than three hours are worked overseas being significant, subject to the conditions of the statute. S02 S01

9. Failing that, the individual is resident if they spend at least 183 days in the United Kingdom in the tax year. They are also resident, in particular, if they have a home in the United Kingdom for at least 91 consecutive days, at least 30 of which fall in the tax year, and are present in it on at least 30 days, while having no overseas home or being present in that overseas home on fewer than 30 days; or if they work full-time in the United Kingdom for a period of 365 days falling wholly or partly in the tax year, provided that more than 75% of the days in that period on which they work more than three hours are days on which they work in the United Kingdom, that at least one day falling both in that period and in the tax year is such a UK working day, and that there is no significant break from UK work during the period. S02 S01

10. The sufficient ties test then applies. It takes into account a family tie, an accommodation tie, a work tie, a 90-day tie and, for an individual who was resident in any of the three preceding tax years, a country tie. The greater the number of ties, the fewer the days allowed before the individual becomes resident, as shown in the tables below. These tables assume that no automatic test has been met. S02

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Days spent in the United Kingdom in the tax year	Ties required if resident in any of the 3 preceding tax years	Ties required if non-resident in each of the 3 preceding tax years	Sources
16 to 45	At least 4	Test not applicable: automatically non-resident below 46 days	S02
46 to 90	At least 3	All 4 ties	S02
91 to 120	At least 2	At least 3	S02
More than 120	At least 1	At least 2	S02

11. The year of arrival or departure is not split automatically. Split year treatment is available only if one of the specified cases is met: cases 1 to 3 on departure, cases 4 to 8 on arrival, each with its own conditions and an order of priority. Otherwise, an individual resident for the whole year is resident from 6 April, including for income received before their arrival. S02 S01

12. Leaving the United Kingdom does not necessarily remove taxation of income and gains realised during the absence. The temporary non-residence rules apply to an individual who had sole UK residence for at least four of the seven tax years preceding departure and whose period of non-residence is five years or less. Certain capital gains, distributions from close companies or pension income realised during the absence may then be taxed in the year of return. Beyond five years, these rules cease to apply. S02 S31

13. In the sources examined, UK law contains no general exit tax on individuals comparable to the French regime for unrealised capital gains. The temporary non-residence mechanism operates differently: it does not tax on departure, but it catches certain items where the individual returns early. This difference must be reconciled with the French exit tax where the individual leaves France for the United Kingdom. S02 S31

14. A taxpayer who is resident under the SRT and who is also resident of another State for the purposes of a treaty remains resident under domestic law; the treaty then allocates the taxing rights. For the purposes of the FIG regime conditions, HMRC states that treaty non-residence and split year treatment are disregarded, both for the year of the claim and for counting the ten years of non-residence. Treaty residence in the other State is not presumed and must be established under Article 4 of the applicable treaty. S41 S24

3. Income Tax and National Insurance contributions

15. For 2026-2027, the standard Personal Allowance is £12,570. It is reduced by £1 for every £2 of adjusted net income above £100,000 and falls to nil from £125,140. A high-income taxpayer therefore loses the allowance, which produces an effective marginal rate higher than the nominal rate of the band concerned. S06

16. The scale applicable outside Scotland, with the standard Personal Allowance, is as follows. It applies to income other than dividends, which follow their own rates, and must be adjusted where the allowance is reduced or unavailable. S06

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Band (outside Scotland, 2026-2027)	Taxable income	Rate	Sources
Personal Allowance	Up to £12,570	0%	S06
Basic rate	£12,571 to £50,270	20%	S06
Higher rate	£50,271 to £125,140	40%	S06
Additional rate	Over £125,140	45%	S06

17. For a Scottish taxpayer, the 2026-2027 scale comprises a starter rate of 19%, a basic rate of 20%, an intermediate rate of 21%, a higher rate of 42% from £43,663, an advanced rate of 45% from £75,001 and a top rate of 48% above £125,140. These rates do not apply to dividends or savings. S07

18. Dividends benefit from a dividend allowance of £500 a year. Above that amount, they are taxed, for 2026-2027, at 10.75% in the basic rate band, 35.75% in the higher rate band and 39.35% in the additional rate band. The band is determined by adding the dividends to other income. The two-percentage-point increase in the dividend ordinary and upper rates, applicable since April 2026, results from the Finance Act 2026; the additional rate is unchanged. S08 S34 S42

19. Other changes made by the Finance Act 2026 apply only from the 2027-2028 tax year. For that year, the savings rates are set at 22%, 42% and 47%, and separate property income rates are created at the same levels of 22%, 42% and 47%. From the same year, property income is placed in the order of income immediately before savings and dividends and the order in which reliefs are set off is changed; other consequential adjustments appear in Schedule 1 to the Act and are not detailed here. Scottish and Welsh taxpayers are subject to separate provisions: the transfer to the Scottish and Welsh Parliaments of the power to set their property income rates (section 8 of and Schedule 2 to the Act) has been in force since 16 September 2026 and applies from the 2027-2028 tax year; the corresponding rates, to be set by those Parliaments, are not quantified here. A projection of rental or savings income for 2027-2028 therefore cannot use the scale in paragraph 16. S34 S57 S58 S56 S59 S62

20. Employees and employers pay Class 1 contributions above certain thresholds. For 2026-2027, the employee pays 8% between the Primary Threshold and the Upper Earnings Limit, then 2% above it; the employer pays 15% above the Secondary Threshold, set at £96 a week. Benefits in kind give rise to Class 1A employer contributions at 15%. Zero employer rates apply, subject to conditions and up to a cap on earnings, for certain young employees, apprentices, veterans or employees in special zones; employee contributions remain payable. S09

21. For the self-employed, Class 4 contributions are 6% on profits between £12,570 and £50,270, then 2% above that amount, for 2026-2027. Class 2 follows its own rules and thresholds. These contributions are payable in addition to Income Tax and must be distinguished from the social security coordination rules applicable to a mobile worker, which are not covered here. S09

4. The four-year FIG regime and Overseas Workday Relief

22. On 6 April 2025, the four-year foreign income and gains (FIG) regime replaced the remittance basis. The remittance basis can no longer be claimed for tax years after 2024-2025. The new regime no longer depends on domicile: it is open, whatever the individual's nationality or domicile, to "qualifying new residents". S03 S41 S04

23. An individual is a qualifying new resident for a tax year if they are UK resident under the SRT for that year and were not UK resident for at least ten consecutive tax years immediately preceding it. They are also a qualifying new resident for each of the three tax years immediately following that first year, provided they are resident in those years, giving a maximum of four consecutive years. Members of the House of Commons or the House of Lords are excluded, and the individual must be at least 10 years old at the start of the tax year. S41 S03

24. The four years cannot be carried forward. A year of temporary non-residence during the period cannot benefit from the regime, and lost years are not added at the end. For an individual who arrived before 6 April 2025, the years of the four-year period before 2025-2026 are used up without giving entitlement to the regime; HMRC illustrates the case of an arrival in 2022-2023 which leaves only one eligible year. S03 S41

25. Qualifying foreign income includes, among other things, the profits of a trade carried on wholly outside the United Kingdom, income from an overseas property business, dividends from non-resident companies and foreign interest; foreign gains are subject to separate definitional rules. Only income and gains arising in a tax year for which a claim is made, and no earlier than 6 April 2025, can be relieved; the test is the year in which they arise, not the period over which a gain accrued. Foreign employment income does not fall within the FIG regime, but possibly within Overseas Workday Relief. S03 S41

26. The regime is not automatic. The claim is made in the Self Assessment tax return, year by year and source by source: the taxpayer can choose the income and gains concerned. For that year, it entails the loss of Income Tax allowances and the Capital Gains Tax annual exempt amount, as well as certain married couple's allowances. Relieved foreign income is still taken into account for certain adjusted net income calculations. S03 S10

27. Overseas Workday Relief (OWR) was reformed with effect from 6 April 2025. It covers employment income relating to workdays performed outside the United Kingdom in a year in which the employee is a qualifying new resident, subject to a limit of four years. The election and the claim are made in the tax return; for the year concerned, the election results in the loss of the Personal Allowance, the Capital Gains Tax annual exempt amount and the ability to claim foreign losses. The amount of the relief is capped at the lower of 30% of qualifying employment income and £300,000 a year, subject to transitional provisions. S05 S33

28. The apportionment between UK and overseas workdays is made on a just and reasonable basis; HMRC indicates that a pro rata apportionment by workdays is normally expected. The relief is available whether the earnings are paid into a UK or an overseas account, and earnings received overseas can be brought to the United Kingdom without a tax charge. A consistent contract, work calendar and travel records remain essential to support the apportionment. S05 S33

29. For former remittance basis users, the Temporary Repatriation Facility allows pre-reform foreign income and gains to be designated and remitted at a reduced rate for three tax years from 2025-2026: 12% for the first two years, then 15% for the last year. A transitional measure also allows certain foreign assets to be rebased to their value at 5 April 2017 for capital gains purposes. These measures are subject to their own conditions and do not benefit a new arrival. S33 S04

30. The end of protection for trust structures is a sensitive point. Foreign income and gains of settlor-interested trusts are no longer protected for individuals who are not eligible for the FIG regime; according to HMRC's impact note, they will be taxed as they arise in most cases. A trust set up before the reform must therefore be reviewed from 2025-2026, regardless of its previous treatment. S33

5. Non-residents and UK-source income

31. A non-resident remains in principle taxable in the United Kingdom on UK-source income, notably pensions, rental income, interest or wages. Non-residents are not usually taxed on the State Pension or on interest from government bonds (gilts), and most disposals of assets fall outside UK tax, except UK property and land. A treaty may also reduce or eliminate UK taxation. S50 S24

32. A non-resident is entitled to the Personal Allowance if they are a British citizen or a national of the European Economic Area, or if they worked for the UK Government during the year; a treaty may also give entitlement. The individual must then claim it at the end of each year. A non-resident French national therefore in principle falls within the EEA category, subject to the claim. S43

33. A landlord who lives abroad for six months or more a year is a "non-resident landlord" for HMRC purposes, even if UK resident for tax purposes. The letting agent, or the tenant paying more than £100 a week where there is no agent, deducts tax at the basic rate from the rent, after certain expenses, unless HMRC authorises the landlord to receive the rent gross and to report it through Self Assessment. This deduction does not remove the obligation to file an annual return, unless HMRC indicates otherwise. The basic rate referred to is the 2026-2027 rate; the effect on this deduction of the property income rates applicable from 2027-2028 is not established by the sources examined. S28 S56

34. A non-resident who disposes of UK property or land, residential or not, or of an asset deriving at least 75% of its value from UK land where they hold an interest of at least 25%, must report the disposal even if no tax is due or a loss arises. For a disposal completed on or after 27 October 2021, the return must be filed and the tax paid within 60 days. Non-resident companies have been subject to Corporation Tax, and not Capital Gains Tax, on these gains since 6 April 2019. S32 S39

35. The computation of a non-resident's gain takes account of rebasing rules: at 5 April 2015 for residential property and at 5 April 2019 for other property and land and for indirect disposals, with the option, depending on the case, of computing the gain over the whole period of ownership or using time apportionment. A non-resident individual is generally entitled to the annual exempt amount in the same way as a resident. S39 S10

36. Under domestic law, a company or other payer paying yearly interest arising in the United Kingdom to a person whose usual place of abode is outside the United Kingdom must in principle deduct tax at the basic rate, namely 20% for 2026-2027; from 2027-2028, the deduction will be made at the savings basic rate, increased to 22% for that year; deduction at the basic rate also applies to certain intellectual property royalties paid abroad. Numerous domestic and treaty exceptions exist. For a beneficial owner resident in France, the treaty allocates the right to tax interest and royalties to the State of residence alone, subject to the conditions and to the anti-abuse clause. S46 S57 S47 S24 S37

6. Companies: residence, taxable base and rates

37. A company incorporated in the United Kingdom is UK resident for Corporation Tax purposes, even if another rule of law would place its residence elsewhere. A company incorporated abroad may also be resident if its central management and control is exercised in the United Kingdom, under the De Beers and Unit Construction case law. This is a question of fact concerning the highest level of control of the business; dual residence is then dealt with under the applicable treaty. S14 S45 S24

38. The main rate of Corporation Tax is 25% for profits above £250,000. The small profits rate of 19% is reserved for UK resident companies that are not close investment-holding companies and whose augmented profits, including certain distributions received, do not exceed £50,000; a non-UK resident company chargeable to tax in the United Kingdom falls under the main rate. Between the two thresholds, Marginal Relief provides a gradual increase in the effective rate. The applicable rate is that of the financial year, from 1 April to 31 March; an accounting period straddling two financial years is apportioned by the number of days. S51 S12 S13

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Taxable profits (12-month accounting period, no associated company)	Rate or mechanism	Conditions and limits	Sources
Up to £50,000	19% (small profits rate)	Reserved for resident companies other than close investment-holding companies; threshold assessed on profits augmented by certain distributions received; thresholds reduced for short accounting periods and according to the number of associated companies.	S51 S12 S13
From £50,000 to £250,000	25% less Marginal Relief	Not available to non-resident companies or close investment holding companies.	S13
Over £250,000	25% (main rate)	Different rates for oil "ring fence" profits.	S12

39. The £50,000 and £250,000 thresholds are divided by the number of associated companies plus one: with three associated companies, they become £12,500 and £62,500. They are also proportionately reduced for an accounting period of less than twelve months. Marginal Relief cannot be claimed by a non-resident company or by a close investment holding company. Multiplying companies therefore does not make it possible to split profits so as to benefit from several 19% rates. S13

40. Dividends and other distributions received by a company are within the charge to Corporation Tax, but only if they are not exempt under the chapters applicable to small companies and to other companies. The exemption is therefore not available as a matter of principle; the category of distribution and, where relevant, the anti-avoidance rules must be checked. S48

41. The controlled foreign company (CFC) rules target non-resident companies controlled by UK residents where UK profits have been diverted to them. Profits that pass through the "gateways" in the legislation are apportioned to the UK corporate shareholder holding an interest of at least 25%. Several entity-level exemptions exist. A UAE subsidiary of a UK group must therefore be examined from this angle, and not only from the angle of its residence. S38

42. Multinational groups fall within Pillar 2 where consolidated revenue exceeds the threshold of 750 million euros, proportionately adjusted for an accounting period that is not twelve months, in at least two of the four preceding accounting periods, under the rules of the Finance (No. 2) Act 2023. The United Kingdom applies a multinational top-up tax, governed by Part 3 of that Act, and a domestic top-up tax governed by other provisions not cited here. These taxes do not replace Corporation Tax at the headline rate. S40

7. VAT

43. The standard rate of UK VAT is 20%. A reduced rate of 5% and a zero rate apply to defined goods and services, while other supplies are exempt or outside the scope of VAT. The zero rate is not an exemption: HMRC treats zero-rated supplies as taxable supplies in all other respects, including for the recovery of VAT on expenditure, subject to certain restrictions. The applicable rate depends on the precise nature of the goods or services, the supplier, the place of supply and the supporting evidence. S44 S15 S60

44. A business established in the United Kingdom must register when its VAT taxable turnover for the last twelve months exceeds £90,000, or when it expects to exceed that amount in the next 30 days. Where the threshold has been exceeded, registration must be applied for within 30 days of the end of the month in which it was exceeded; where it is expected to be exceeded, registration must be applied for before the end of the 30-day period. The effective date of registration differs depending on the case. Voluntary registration is possible below the threshold. S16

45. A business established outside the United Kingdom that supplies goods or services in the United Kingdom, or expects to do so in the next 30 days, must in principle register without the benefit of the £90,000 threshold. A UAE or French company selling in the United Kingdom must therefore check the place of supply of its transactions and its status as a non-established taxable person before considering the threshold. S16

8. Real estate: acquisition, holding through a company and disposal

46. In England and Northern Ireland, SDLT on the purchase of a residential property is calculated on slices of the price. The scale below applies where the property purchased is the only residential property owned by the buyer; special rules apply to first-time buyers, who pay nothing up to £300,000 and 5% from £300,001 to £500,000, with no relief available above £500,000. S17

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Portion of the price (residential, England and Northern Ireland)	Standard rates	Higher rates (additional properties, since 1 April 2025)	Sources
Up to £125,000	0%	5%	S17 S18
From £125,001 to £250,000	2%	7%	S17 S18
From £250,001 to £925,000	5%	10%	S17 S18
From £925,001 to £1.5 million	10%	15%	S17 S18
Over £1.5 million	12%	17%	S17 S18

47. The higher rates apply to the purchase of a residential property of £40,000 or more where the buyer will own more than one residential property of that value, wherever in the world it is situated, and no other person holds a lease of the property with more than 21 years left to run. They do not apply on the replacement of a main residence where the previous one has been sold within 36 months; if it has not yet been sold at completion, the higher rates are payable, subject to a refund. Spouses and civil partners are treated together. A French individual who continues to own, alone, in part or through their spouse, their home in France worth at least £40,000 and buys in London is therefore exposed to the higher rates, even if they intend to live there; merely renting a home in France does not produce this effect. S18 S17

48. A surcharge of two percentage points applies where any of the buyers is non-resident in relation to the transaction, for the purchase of a residential freehold interest of £40,000 or more, or of a residential lease of more than seven years where the premium reaches £40,000 or the rent £1,000. For an individual, this test is based on presence in the United Kingdom for at least 183 days during the twelve months preceding the purchase; it is distinct from the SRT, and the spouse or civil partner, not separated, of a resident buyer is treated as resident when they buy together; whether a French PACS is to be treated as a civil partnership is not established here. A refund of the surcharge may be claimed if the individual buyer is subsequently present for at least 183 days during a continuous period of 365 days falling within the window running from 364 days before to 365 days after the purchase. The surcharge also applies to certain UK companies controlled by non-residents and is cumulative, where applicable, with the higher rates. S19 S17

49. Certain entities, notably companies, that purchase a residential property for more than £500,000 may be subject to a 17% rate. This rate does not apply to a company acting as trustee and may be disapplied by reliefs, in particular those linked to certain activities; these conditions must be checked before the purchase. S30

50. The Annual Tax on Enveloped Dwellings (ATED) is an annual tax payable mainly by companies, partnerships with a company member and collective investment schemes that own a UK dwelling worth more than £500,000. The value is determined on five-yearly revaluation dates; for the periods 2023-2024 to 2027-2028, the date is 1 April 2022 or the date of acquisition if later. Reliefs may reduce the tax to nil, but a return is in principle still required. S20

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Value of the dwelling (period from 1 April 2026 to 31 March 2027)	Annual ATED charge	Sources
More than £500,000 up to £1 million	£4,600	S20
More than £1 million up to £2 million	£9,450	S20
More than £2 million up to £5 million	£32,200	S20
More than £5 million up to £10 million	£75,450	S20
More than £10 million up to £20 million	£151,450	S20
More than £20 million	£303,450	S20

51. For individuals, Capital Gains Tax (CGT) is charged at 18% or 24% depending on the Income Tax band, rates already applicable in 2025-2026 other than for carried interest; the rate for trustees and personal representatives is 24%. The annual exempt amount is £3,000 for 2026-2027, and £1,500 for most trustees. Different rates apply to earlier disposals and, from 6 April 2025 to 5 April 2026, to carried interest gains, taxed at 32%; from 2026-2027, carried interest falls within Income Tax under a separate regime, not detailed here. S10 S65

52. Business Asset Disposal Relief reduces the rate applicable to eligible gains to 18% for disposals made on or after 6 April 2026, compared with 14% between 6 April 2025 and 5 April 2026. For shares other than EMI shares, the company must in particular be a "personal company" for at least two years, with a holding of at least 5% of the share capital and voting rights, and the person disposing of the shares must be an employee or officer of it; the company's main activity must be trading. The rate is therefore now the same as the ordinary lower rate. S11 S10

9. Assets and wealth

53. The sources examined do not show any general annual wealth tax in the United Kingdom. The holding of assets is nevertheless caught by targeted taxes: ATED on high-value dwellings held by entities, Inheritance Tax on transfers and the anti-avoidance rules relating to trusts. The absence of a wealth tax therefore does not mean the absence of tax on the holding of a dwelling by a company. S20 S21 S33

54. The 2008 France-UK treaty retains a provision specific to the French wealth tax (impôt de solidarité sur la fortune): assets situated outside France of a resident of France who is a UK national and not a French national were excluded from the tax base for the five calendar years following their settlement in France, a new five-year period being available after non-residence of at least three years. Whether this clause carries over to the French real estate wealth tax (impôt sur la fortune immobilière) is not established by this factsheet and must be checked on the French side. S24

10. Inheritances and gifts: long-term residence

55. Since 6 April 2025, the domicile and deemed domicile rules have been replaced, for Inheritance Tax (IHT), by the long-term residence test. A long-term resident may be subject to IHT on their non-UK assets on a transfer or on death; an individual who is not a long-term resident is taxed only on their UK assets, certain assets being excluded, such as foreign currency accounts or overseas pensions. A transfer or death before that date falls under the former domicile-based law. S22 S23 S49

56. Section 6A of the Inheritance Tax Act 1984 defines a long-term UK resident as an individual who has been UK resident for at least 10 of the previous 20 tax years. The status ends after ten consecutive years of non-residence within the previous nineteen years, or after a period of non-residence that varies with the number of prior years of residence: three years for 13 years or fewer, then one additional year for each additional year, up to ten years for 20 years. Special rules apply to young people and to the election for long-term resident status. S23 S22

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Years of residence in the 20 tax years ending with the last year of residence	Consecutive years of non-residence required to lose the status	Sources
13 or fewer (and at least 10)	3	S23 S22
14	4	S23 S22
15	5	S23 S22
16 to 19	6 to 9 (one year for each year of residence beyond 15)	S23
20	10	S23

57. Transitional rules protect certain individuals. In particular, an individual is not a long-term resident if they were neither UK domiciled nor deemed UK domiciled on 30 October 2024, are non-resident in 2025-2026 and do not return. An individual who was deemed domiciled on 30 October 2024, is non-resident in 2025-2026 and does not return loses that status after three years of non-residence. These conditions must be demonstrated year by year. S22

58. The nil-rate band is £325,000, and an additional residence nil-rate band of £175,000 applies where a residence is passed on to direct descendants; the latter is reduced by £1 for every £2 of net estate above £2 million. These amounts are frozen up to and including the 2030-2031 tax year, under section 86 of the Finance Act 2021 as last amended by section 72 of the Finance Act 2026. Unused portions may be transferred to the surviving spouse or civil partner. The standard rate is 40% on the portion exceeding the threshold, reduced to 36% on certain assets if at least 10% of the net estate is left to charity. S21 S27 S52 S35

59. Lifetime gifts may be taxed if the donor dies within seven years; taper relief may then apply to the tax. It is therefore not an immediate definitive exemption. Transfers into a trust, by contrast, are subject to a separate regime, with periodic and exit charges. S21 S27

60. The reform of agricultural and business property relief applies from 6 April 2026: an allowance of £2.5 million applies to the combined value of property eligible for 100% relief, and the relief is 50% above that amount. The unused allowance is transferable to the surviving spouse. The relief is reduced to 50% for shares admitted to trading on recognised markets without being "listed" there, and for certain shares listed on foreign markets that are not recognised. Transitional rules apply to gifts made on or after 30 October 2024 where the donor dies on or after 6 April 2026 within seven years. S25 S42 S63

61. From 6 April 2027, most unused pension funds and death benefits will form part of the value of the estate for IHT, with personal representatives responsible for reporting and paying. Death in service benefits paid by a registered scheme and certain dependants' pensions are excluded. Estate planning based on retaining pension savings must therefore be reviewed. S26 S42 S64

62. Anti-avoidance measures announced in November 2025 complete the framework and were enacted by the Finance Act 2026. That Act extends, from 6 April 2026, the look-through regime of Schedule A1 to the IHTA 1984 to foreign property whose value derives from UK agricultural property, which had previously been limited to UK residential interests. It restricts the relief for gifts to gifts made directly to charities or registered clubs, excluding property merely held on trust for those purposes, for deaths occurring on or after 6 April 2026 and other transfers on or after 26 November 2025, with transitional protection for certain pre-existing interests in possession. Finally, section 73 of that Act disapplies, with effect from 26 November 2025, the exemptions from the trust exit charge where the settlor was not a long-term resident at the start of 2025-2026 or subsequently ceased to be one, that change occurred before the chargeable event and, where applicable, after the trust's last ten-year anniversary, it did not give rise to a charge and it would have given rise to one if the property had been situated outside the United Kingdom. S36 S55 S53 S54 S61

11. Treaties, notably with France, and international obligations

63. The France-UK double taxation convention on taxes on income and capital gains was signed in London on 19 June 2008 and entered into force on 18 December 2009. It was modified by the Multilateral Instrument (MLI), which entered into force on 1 October 2018 for the United Kingdom and on 1 January 2019 for France; HMRC publishes a synthesised text, which does not have the status of the authentic text. S24 S37

64. In the case of dual residence of an individual, Article 4 considers in turn the permanent home, the centre of vital interests, the habitual abode, then nationality; failing that, the competent authorities settle the question by mutual agreement. An individual who is liable to tax in a State only in respect of income from sources in that State is not resident there. For a person other than an individual, the treaty applies the place of effective management. S24

65. Dividends paid to a resident of the other State may be taxed in the source State up to a limit of 15% of the gross amount, and are exempt there where the beneficial owner is a company subject to corporation tax holding at least 10% of the capital. These limits do not apply to dividends paid out of exempt income from immovable property of an investment vehicle that distributes most of its income, where the beneficial owner holds at least 10% of its capital: the domestic rate of the source State then applies. Interest and royalties are taxable only in the State of residence of the beneficial owner. The original anti-abuse clauses have been replaced by the principal purpose test in Article 7 of the MLI. S24 S37

66. Gains from immovable property are taxable in the State in which it is situated, as are gains on shares not regularly traded on a recognised stock exchange that derive most of their value from immovable property situated in that State. Other gains are in principle taxable in the State of residence, but each State retains the right to tax, under its domestic law, an individual who is a resident of that State and has been so at any time during the previous six tax years, or who is so at any time during the tax year of the disposal. This clause may be relevant for UK temporary non-residence and for the French exit tax, subject to the authentic French text, which this factsheet does not analyse. S24 S02

67. Private pensions paid in consideration of past employment are taxable only in the State of residence, subject to government pensions under Article 19, which follow their own nationality and residence rules. A UK public sector pension paid to a resident of France is therefore not necessarily taxable in France. S24

68. Article 29 limits treaty benefits where the other State taxes income only to the extent of the amounts remitted to or received in that State, other than business profits and dividends. Drafted for the remittance basis, it has not been rewritten for the FIG regime, which exempts income on a claim without any link to its remittance. Its interaction with FIG relief is not established by the sources examined and must be analysed case by case, notably on the French side. S24 S03

69. To eliminate double taxation, the United Kingdom allows a credit for French tax on French-source income under the conditions of its domestic law. In France, income taxable in the United Kingdom is taken into account in computing French tax, with a tax credit in accordance with Article 24. The French method is not a pure exemption: the exact calculation must be made under the French provisions. S24

70. For inheritance purposes, HMRC mentions the treaty with France among those concluded in the Estate Duty era, before 1975, which follow different rules and contain no deemed domicile provision. The unilateral relief described by HMRC covers countries with which the United Kingdom has not concluded a treaty; for France, the elimination of double taxation falls under the old estate duty treaty, whose interaction with unilateral relief is not analysed here. The interaction between UK long-term residence and French inheritance tax therefore requires specific analysis. S29

12. Illustrative cases and limits of application

71. Case 1 — a French entrepreneur who has lived in Dubai for twelve years moves to London on 1 May 2026. Not having been UK resident during the previous ten years, he may be a qualifying new resident for 2026-2027 and for each of the following three tax years, if he is resident in those years. He may claim relief for his UAE dividends and for his foreign gains arising in his qualifying years, at the cost of losing his allowances. The year of arrival is split only if a split year case is met; otherwise, he is resident from 6 April 2026. S41 S03 S02

72. Case 2 — a long-standing UK resident leaves for Dubai in September 2026 and returns after four years. If he had sole UK residence for at least four of the seven preceding tax years, his period of non-residence does not exceed five years and the gains realised during his absence on assets he already held on departure may, subject to the exceptions for certain assets acquired subsequently, be taxed in the year of his return. Nor will he be a qualifying new resident on his return, since he will not have ten years of non-residence. For inheritance purposes, he remains a long-term resident for several years depending on his history. S02 S31 S03 S23

73. Case 3 — a UAE company whose directors take decisions in London purchases a London flat for £3 million. The company may be UK resident by virtue of its central management and control. The purchase may be subject to the 17% rate applicable to certain entities, unless a relief opens up other rates, together with, where applicable, the non-resident surcharge; the annual ATED charge is payable for the £2 million to £5 million band, subject to a relief being claimed. S45 S30 S19 S20

74. Case 4 — a French individual resident in France sells a London flat in 2026. He must report the disposal to HMRC and pay the tax within 60 days, in accordance with the applicable rebasing rules; the gain is taxable in the United Kingdom under Article 14 of the treaty. In France, the gain is taken into account under Article 24, with a tax credit set off under the treaty conditions. S32 S39 S24

75. Limits. This factsheet does not quantify the Scottish and Welsh land transaction taxes, all SDLT and ATED reliefs, sectoral regimes, investment incentives, trust regimes or the detailed international social security rules. The interaction between the FIG regime and Article 29 of the treaty remains to be checked. The thresholds cited may be amended by a Finance Act passed after the date of this factsheet. S19 S24 S42

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Document date: 2026-09-15 · Recorded source access: 2026-09-20

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