Deciding to live overseas is exciting but it brings a handful of UK tax, pension and property issues you should sort before you go. Read on to discover the practical steps, traps and checks most people miss.
Tell HMRC: R85 (and P85) – don’t leave tax matters to chance
If you’ll be getting UK interest (bank accounts) while abroad, complete form R85 so your bank knows whether to pay interest without UK tax deducted. If you’re leaving the UK permanently or long-term you should also tell HMRC using the leaving-the-UK guidance (P85 or online service) so they can update your tax records. These forms don’t replace the residency test (see next section) but they’re vital housekeeping so tax is handled correctly.
Residency isn’t automatic – the Statutory Residence Test (SRT) decides it
You don’t simply “declare” non-resident status – HMRC apply the Statutory Residence Test which looks at days in the UK, ties to the UK (family/home/work), and your pattern of presence. There are automatic tests (if you spend 183+ days you’re resident; other automatic overseas tests can make you non-resident) and the “ties” test which uses things like a 90-day tie. In short: plan your days and your UK ties carefully, small changes (a few extra visits, keeping a furnished UK home) can change your tax position. If in doubt, get bespoke advice before you travel.
Visiting the UK after you become non-resident – watch the limits
Once non-resident for tax purposes you still need to watch how many days you spend here. The SRT and ties calculation contain 30/90/183 day thresholds and “90-day ties” which feed into whether you remain non-resident. Don’t assume “I can pop back whenever” as frequent or long visits can break non-resident status. (If you’re unsure how many days you’ll spend here, seek specialist advice, the rules are precise.)
You’ll still pay UK tax on UK-source income (including UK work and rental)
Being non-resident doesn’t mean no UK tax at all. You must pay UK tax on UK-source earnings, for example UK employment income, rental profits from UK property and gains on UK land. If you continue to receive UK income, you’ll still have UK filing or withholding obligations.
Renting your UK property? Change your mortgage and register appropriately
If you move abroad and let your UK home, you’ll usually need to switch your mortgage from residential to buy-to-let (check with your lender, staying on a residential mortgage when letting is often a breach of terms). Also register with HMRC as a non-resident landlord (or use the Non-Resident Landlord Scheme) so tax is dealt with correctly, otherwise agents or tenants may be required to deduct tax from rental receipts. Plan for landlord admin: letting agents, insurance, tax returns and non-resident registration.
National Insurance and your State Pension – think about Class 3 voluntary contributions
Time abroad can create gaps in your National Insurance record. If you want to protect your State Pension entitlement you may be able to pay voluntary Class 3 contributions to fill gaps (usually you can pay for the previous six tax years; check deadlines). Whether it’s worth paying depends on your years to State Pension age and whether you were contracted-out in the past – check your State Pension forecast or get advice from the Future Pension Centre.
Other things to check before you move
- Double-tax treaties: If you’ll be taxed abroad as well as in the UK, a double-tax agreement between the UK and your destination may reduce or eliminate double taxation – check the treaty terms.
- Split-year treatment: In some leaving/arriving years HMRC applies a split-year treatment which can simplify tax for the year you move – get advice on whether you qualify.
- Pensions and withdrawals: UK pensions have specific tax and transfer rules (QROPS, overseas tax on withdrawals). Don’t move large pension pots without specialist advice.
- Banking and credit: Notify banks, update contact details, understand cross-border fees and whether UK accounts require UK address details.
- Council tax / benefits / NHS: If you’re away long-term you may lose entitlement to some local benefits and NHS registration nuances can apply.
- Will and inheritance tax: Your domicile and residence position can affect inheritance tax – review wills and estate planning.
- Employer obligations: If you keep UK employment contracts, check payroll and income-tax withholding implications for someone living abroad.
Practical checklist
- Read HMRC guidance and complete R85 (for interest) and tell HMRC you’re leaving (P85/online) where appropriate.
- Map out the days you expect to be in the UK and assess the Statutory Residence Test – get a professional residency calculation.
- If you’ll let your UK home: inform your mortgage lender, switch to buy-to-let if required, register as a non-resident landlord or check Non-Resident Landlord Scheme approval.
- Check National Insurance gaps and consider Class 3 voluntary contributions to protect State Pension entitlement.
- Review double-tax treaties, pension rules and any employer payroll implications.
Need help? Don’t wing it
The interaction of residence, UK-source income, property letting and pensions can be complicated and very fact-sensitive. If you’re planning to move (or already have), get in touch with us, we can run a residency check, help with HMRC forms, advise on mortgage and landlord steps and model how the move affects your UK tax and State Pension.