Tax obligations when moving abroad 2026: what you must do before you leave your home country

Moving abroad doesn’t automatically make you a non-resident for tax purposes — and you’ll owe your home country tax until it does. Getting this wrong can mean double taxation, unexpected bills, or HMRC/IRS penalties years after you’ve moved.

UK: the Statutory Residence Test

For UK tax purposes, your residency status is determined by the Statutory Residence Test (SRT). Leaving the UK doesn’t automatically make you non-resident. The key automatic tests:

• You are automatically non-resident if: you were resident in UK in at least one of previous 3 tax years AND spend fewer than 16 days in the UK in the tax year; OR you were non-resident in all of previous 3 tax years AND spend fewer than 46 days in UK.
• You are automatically resident if: you spend 183 days or more in UK in tax year; OR you have a home in UK where you spend 91+ days over a period.

The ‘split year’ treatment applies in the year you leave — you’re taxed as UK resident for the pre-departure period and non-resident for the remainder.

UK: what to do before you leave

1. Submit HMRC form P85 (Leaving the UK: getting your tax right). This notifies HMRC of your departure date and allows any overpaid PAYE to be reclaimed.
2. Notify your employer: your employer should adjust your tax code upon departure. Ensure your P60 is issued for the final period.
3. Check your National Insurance contribution record via your HMRC Personal Tax Account. Consider making voluntary NI contributions if you’re close to gaps that would affect your State Pension.
4. Inform HMRC of any UK income sources that will continue: rental income from UK property remains UK-taxable even when you’re non-resident. You may need to join the Non-Resident Landlord Scheme.
5. Capital gains: as a UK non-resident, you are still liable for CGT on UK residential property sales.

UK: renting out your property while abroad

UK rental income is taxable in the UK regardless of your residence status. The Non-Resident Landlord (NRL) Scheme handles this:

• By default, letting agents or tenants must deduct 20% basic-rate tax at source from rental payments.
• To receive rent without deduction, apply to HMRC NRL1 for approval — HMRC will then allow your agent to pay rent gross if your tax affairs are up to date.
• You still file a UK Self Assessment each year for the rental income.

USA: tax obligations never fully go away

US citizens and green card holders are taxed on worldwide income regardless of where they live — even if they’ve lived abroad for 20 years. This is unique to the USA.

• File a US tax return every year regardless of where you live.
• FBAR (FinCEN 114): if your foreign financial accounts total over $10,000 at any point in the year, you must file an FBAR. Failure to file: penalties up to $10,000 per violation.
• FATCA (Form 8938): foreign financial assets over $200,000 (single filer, abroad) must be reported on Form 8938.
• Foreign Earned Income Exclusion (FEIE / Form 2555): US expats can exclude up to $126,500 (2024) of foreign-earned income from US taxation if they qualify under the Physical Presence Test (330 days outside US in 12 months) or Bona Fide Residence Test.
• Exit tax: US citizens who formally renounce citizenship may owe a one-time exit tax on unrealised gains. This is not triggered by simply moving abroad.

Dual tax treaties — avoiding double taxation

Most countries have bilateral tax treaties with the UK and USA that prevent you from paying tax twice on the same income. The treaty typically designates the country where you primarily reside as the taxing authority for most income types.

Key practical point: the treaty doesn’t automatically apply — you need to claim treaty benefits on your tax returns and provide proof of tax residence in your new country. A tax residency certificate from your new country’s tax authority is the standard proof.

Pension implications

UK pensions (including State Pension) received abroad may be taxable in your new country under the relevant tax treaty. Check the double tax agreement for the pension article:

• France: UK pension taxable in France (not UK), unless it’s a government service pension
• Spain: private pensions taxable in Spain; State Pension may be UK-taxable
• USA: UK pensions received by US tax residents are typically taxable in USA

What to do with UK bank accounts and investments

You can keep UK bank accounts as a non-resident. Banks must report foreign resident account holders under CRS (Common Reporting Standard) — your new country’s tax authority will receive information about your UK accounts. This is not a problem if you’re declaring correctly.

ISAs: you can keep your existing ISAs, but you cannot contribute to ISAs as a non-UK resident. They continue to grow tax-free.