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More and more people we speak to are considering moving abroad, either permanently or for a few years. If you are moving abroad and own UK property, a UK limited company or investments, it is worth understanding what becoming non UK resident actually means for your UK tax position before you leave.

There also seems to be one particular sunny, tax friendly destination that comes up in conversation rather a lot at the moment. I am sure you can guess which one.

One of the common misconceptions is that once you move abroad, you are automatically outside the UK tax system.

Unfortunately, it isn't quite that simple.

It depends on when you leave, whether you actually become non UK resident, what assets and companies you still have in the UK, what income you take while you are away and whether you eventually come back.

If you are thinking about moving abroad, it is worth looking at all of this before you go rather than trying to sort it out afterwards.

Using a company to invest in UK property

A UK limited company is now a fairly common structure for holding investment property.

For someone looking to build a larger portfolio, we would often consider whether a holding company with separate property companies underneath it makes sense.

For example, you might have a holding company which owns Property Company 1, Property Company 2 and Property Company 3, with each company owning a different property.

There are commercial reasons for doing this as well as tax reasons.

Separate companies can help ring fence the risk attached to individual properties. A group structure can also make it easier to reinvest profits, bring new investments into the group and potentially use group relief where the relevant conditions are met.

Rental profits and gains made by a UK property company are subject to corporation tax.

This can be attractive where the intention is to leave profits in the company and continue investing, rather than drawing all of the income personally each year.

A company can also claim tax relief for qualifying finance costs and capital allowances on certain qualifying expenditure.

The important point is that the right structure depends on what you are actually trying to achieve.

What happens to the company if you move abroad?

Suppose you build up a UK property portfolio through a limited company and a few years later decide to move overseas.

You becoming non UK resident does not mean the UK company stops paying UK tax.

If the company receives UK rental income, the profits remain subject to corporation tax.

If the company later sells one of its properties at a gain, the company will normally pay corporation tax on that gain as well.

The more interesting question is what happens when you want to take money out of the company personally.

Taking dividends while living abroad

An ordinary dividend from a UK company can generally be paid to a non UK resident shareholder without UK dividend withholding tax.

That can make a significant difference.

For example, suppose your property company has built up £500,000 of post tax profits.

If you are UK resident and take the £500,000 as a dividend, you could have a significant personal dividend tax liability.

If you have genuinely become non UK resident before the dividend is paid, the UK tax position can be very different.

However, before anyone starts booking flights based on that paragraph, there is another set of rules we need to consider.

What if you move abroad, take the money and then come back?

This is where the temporary non residence rules become important.

HMRC is well aware of the obvious planning opportunity if somebody could leave the UK for a short period, take a large dividend or sell an asset and then simply return.

There are therefore rules which can bring certain income and gains back into UK tax where someone is only temporarily non resident.

This is particularly relevant where you own your own UK company.

Suppose you own 100% of a UK investment company with £500,000 sitting in the bank.

You move abroad, become non UK resident and take the £500,000 as a dividend.

If you remain overseas for the longer term and fall outside the temporary non residence rules, the UK treatment may be very favourable.

If you take the same £500,000 and return to the UK after a relatively short period, the result could be completely different.

Certain distributions from close companies can potentially be brought back into charge when you return to the UK.

So if the plan is to move abroad for two or three years, take all the money out of the company and then move home again, we would want to look at that very carefully before the dividend is paid.

What if you stay abroad for longer?

This is an important distinction.

If you genuinely become non UK resident and remain overseas sufficiently long to fall outside the temporary non residence provisions, an ordinary dividend received from your UK company while you are non resident can potentially be received without a UK personal income tax charge.

You do, of course, also need to consider the tax rules in the country you have moved to.

Just because the UK doesn't tax something doesn't necessarily mean nobody will.

This is why we prefer to look at the whole position before someone moves.

What about selling the company instead?

This depends very much on what the company owns.

If you own an ordinary UK trading company and sell your shares while genuinely non UK resident, you are not generally subject to UK capital gains tax simply because the company happens to be incorporated in the UK.

Again, temporary non residence needs to be considered if you later return to the UK.

A UK property company can be very different.

The UK has specific rules covering the sale by a non resident of shares in a company whose value comes mainly from UK property.

Broadly, where at least 75% of the company's gross asset value comes from UK land and the relevant ownership conditions are met, the disposal can remain within UK capital gains tax.

So moving abroad for a longer period does not automatically mean you can eventually sell a UK property company free of UK tax.

That is an important distinction between a trading company and a property investment company.

What if the company sells the property?

Suppose your company buys a property for £1 million and several years later it is worth £2 million.

By this point you are living abroad.

If the company sells the property for £2 million, the company has made the gain.

Your personal residence overseas does not change that.

The company will normally be subject to corporation tax on its gain.

Once the property has been sold, you then have another decision to make.

Do you leave the money in the company and reinvest it?

Do you repay borrowing?

Do you buy another property?

Or do you take the money out personally?

If you are living overseas at that point, the timing and method of taking the money out of the company could make a substantial difference to the overall tax position.

What if you own the property personally?

Moving abroad does not take personally owned UK property outside UK capital gains tax either.

If you own a UK property personally and sell it while non UK resident, UK capital gains tax can still apply.

This is why it is important to distinguish between a company selling a property, you selling shares in a property company, you selling shares in a trading company and you selling a property personally.

They may sound similar commercially but the tax treatment can be completely different.

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What about borrowing?

A property company will often borrow to fund acquisitions.

Interest on qualifying borrowing can generally be deductible when calculating the company's taxable property profits, subject to the normal corporation tax rules.

There is also something called the Corporate Interest Restriction.

The name makes it sound slightly more frightening than it is for most owner managed property businesses.

Broadly, the regime becomes particularly relevant where a group's UK net tax interest and financing costs exceed £2 million a year.

For a smaller property group this may never become an issue. For a larger or heavily leveraged portfolio, it is something that should be considered when deciding how acquisitions will be financed.

Exit Planning

A lot of tax planning concentrates on how to buy the property.

We also want to know how you think you might eventually get out.

You might intend to hold the properties for 20 years.

You might sell individual properties as their values increase.

You might eventually sell an entire property company.

Or the intention might be to pass the portfolio to your children.

The best structure for one of those objectives isn't necessarily the best structure for another.

There can also be an assumption that putting each property into a separate company means you can eventually sell the shares in that company without corporation tax because of the Substantial Shareholdings Exemption.

That should not be assumed.

Property investment companies will often not satisfy the relevant trading requirements for the exemption.

It is much better to understand that when setting the structure up rather than discovering it when someone makes you an offer for the company.

What about inheritance tax?

Moving abroad also needs to be considered from an inheritance tax perspective.

The UK rules changed significantly from 6 April 2025 and are now much more focused on an individual's UK residence history.

Someone who has been UK resident for a long period can potentially remain within the UK inheritance tax regime for a period after leaving.

This means that moving abroad does not necessarily remove your worldwide estate from UK inheritance tax immediately.

For anyone with substantial property, company interests or family wealth, this should form part of the planning before the move.

Frequently asked questions about moving abroad and UK tax

Do I stop paying UK tax when I move abroad?

Not necessarily. Your UK tax position depends on whether you actually become non UK resident and what UK income and assets you retain.

For example, UK rental income can remain taxable in the UK even when you are living overseas.

Can I take dividends from my UK company while living abroad?

Potentially. An ordinary UK company dividend can generally be paid to a non UK resident shareholder without UK dividend withholding tax.

However, your residence position, the tax rules in your new country and the UK's temporary non residence rules all need to be considered.

Can I move abroad, take a large dividend and then return to the UK?

Certain distributions from your own close company received while temporarily non resident can potentially be brought into charge when you return to the UK.

Can I sell my UK company after moving abroad?

It depends on the company and your circumstances.

The treatment of an ordinary UK trading company can be very different from a company whose value comes mainly from UK property. Temporary non residence can also affect certain gains made while you are overseas.

Do I still pay UK tax if I sell UK property while living abroad?

Potentially, yes.

Becoming non UK resident does not automatically take a disposal of UK land or property outside UK capital gains tax.

How long do I need to live abroad?

There isn't a simple answer based solely on counting calendar years.

The temporary non residence rules look at your period of non residence and previous UK residence history.

This is one of the reasons we would recommend checking your individual position rather than assuming you simply need to stay abroad for five years.

Thinking about moving abroad?

There are some very attractive reasons for moving overseas. You don't need to tell us just yet.

What we would say is speak to us before you go.

At Fairfax Tax & Accounts, we can look at your UK companies, property, investments and wider tax position before you become non UK resident.

We can also look at what happens if you stay abroad, what happens if you sell assets while you are away and, just as importantly, what happens if you eventually decide to come back.

Moving country can change your tax position significantly.

It is much easier to plan for that before you leave than to try and fix it afterwards.

Are you a doctor or medical professional moving abroad?

If you are considering an overseas medical role, read our separate guide on UK tax for doctors and medical professionals moving abroad, including employment income, UK property, NHS pensions and private medical companies.

This article is for general information only and should not be treated as individual tax advice. Residence, temporary non residence, capital gains tax, inheritance tax and company distributions depend on individual circumstances. Professional advice should be taken before making any decisions.

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