Following the Chancellor’s 2025 Budget announcement, we wanted to highlight several changes that, while not mentioned explicitly in the speech, are deeply relevant to individuals who are no longer UK tax resident. Much of the real impact sits not in the headline measures but in the supporting legislation – where the direction is clear:
The tax position of non-residents is being brought more closely into line with that of UK residents.
If any of these impact you, please reach out to SAIL for help.
1. Income Tax, Savings & Dividends – Rising Exposure for Non-Residents
A number of thresholds remain frozen until 2030/31, and several rate increases take effect from 2026 onwards, including:
- Dividend tax increases (from April 2026)
- Savings income tax rises (from April 2027)
- New standalone property income tax rates (from April 2027)
- Abolition of the dividend tax credit for non-UK residents (from April 2026)
- Removal of homeworking expense deductions
- Reduced access to reliefs for savings, dividends and property income
Why this matters: The removal of the non-resident dividend tax credit means those who previously relied on the “disregarded income” rules will now face actual UK tax on UK dividends for the first time.
Real-life example:
- A non-resident shareholder receiving £25,000 of dividends from a UK family company has historically paid no UK tax due to the notional credit.
- From April 2026, those same dividends may carry a real UK tax charge of several thousand pounds.
This could impact anyone using UK companies for income extraction while living abroad.
2. Capital Gains Tax (CGT) – Broader Reach for Non-Residents
Updates include:
- Relief on disposals to Employee Ownership Trusts reduced to 50% (from Nov 2025)
- Updated NRCGT rules from April 2026, bringing more offshore structures and “property-rich” entities into scope
Impact: Non-residents selling UK property – or selling shares in offshore companies that own UK property – may now fall within NRCGT more often.
Real-life example:
- An expat selling shares in an overseas company that holds a UK rental flat may now face UK CGT, even though the disposal happens offshore.
- This closes previously available structuring routes.
3. UK Pensions & National Insurance – Tougher for Expats
Key reforms:
- Class 2 voluntary NI abolished for overseas individuals (from April 2026)
- Class 3 NI will require 10 years’ UK residency or contributions to qualify
Impact: Building a full UK State Pension from abroad will become significantly harder.
Real-life example:
- An individual who left the UK after only 3–5 years of work may no longer be able to “top up” using Class 2 or Class 3 unless they return to UK employment.
- This will disadvantage anyone who intended to complete their State Pension record later in life.
4. High-Value UK Residential Property – New Annual Charges
From April 2028:
- Properties valued over £2m face an additional annual charge
- Properties over £5m will face a £7,500 annual charge
Real-life example:
- A non-resident retaining a London townhouse valued at £5m will incur an extra £7,500 per year simply for owning it—on top of standard council tax and any ATED charges.
- This increases the long-term cost of holding UK property from overseas.
5. Temporary Non-Residence Rules (TNR) – Quietly More Important Than Ever
HMRC has refreshed guidance on these rules, and with higher UK tax rates arriving from 2026, the timing of any return to the UK has become critical.
If you return within five tax years, the UK can tax certain income and gains realised while abroad, including:
- Foreign asset disposals
- Pension withdrawals
- Business profits
- Offshore bond gains
Real-life example:
An expat who sells a foreign investment property while living abroad, then returns to the UK after four years, could face UK CGT on that gain—even though the property was overseas and taxed abroad.
Small changes in timing (even a few months) can produce very different tax outcomes.
You may live abroad, but UK tax policy increasingly follows you.
These Budget measures – both stated and unstated – highlight the importance of early planning and proactive cross-border structuring.
If you would like a personalised review of how these changes may affect you, we would be happy to assist.