Temporary Non-Residence Rule UK: What Non-Residents Need to Track

The temporary non-residence rule in the UK determines how certain UK taxes, especially Capital Gains Tax, apply to gains made while living outside the UK.

It affects UK tax residents who move abroad temporarily and later return.

This article explores:

• How long can a non-resident UK citizen stay in the UK?
• How do I qualify as a temporary non-resident in the UK?
• What is the 5 year rule in the UK?
• What is the 60% tax trap in the UK?

Key Takeaways:

• Temporary non-residents may still be taxed on UK gains if returning within 5 years.
• Non-residents are generally not taxed on foreign income.
• Spending more than 90 days in the UK may affect non-resident status.
• Proper planning can minimize exposure to UK tax traps for returning expats.

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The information in this article is for general guidance only. It does not constitute financial, legal, or tax advice, and is not a recommendation or solicitation to invest. Some facts may have changed since the time of writing.

What is the Temporary Non-Residence Rule in the UK?

The UK temporary non-residence rule is a tax provision that applies to individuals who leave the UK and become non-resident for a period but later return.

Its purpose is to prevent taxpayers from avoiding UK Capital Gains Tax by briefly moving abroad and selling assets while overseas.

Key points:

• Applies to individuals who were UK tax residents before leaving.
• Typically affects UK residents who become non-resident for fewer than 5 full tax years.
• Certain gains realized on assets may still be taxed if sold within the temporary non-residence period.

How Many Days Can You Be in the UK as a Non-Resident?

A non-resident can spend up to 45 days in the UK per tax year without automatically being treated as a UK tax resident.

• If you were UK resident in one of the previous three tax years, you must spend fewer than 16 days in the UK to qualify for automatic non-resident status.
• If you were not resident in any of the previous three tax years, you can spend up to 45 days to remain non-resident.
• Full-time workers abroad may spend up to 90 days in the UK, including fewer than 31 working days, without losing non-resident status.
• Individuals outside these automatic rules are assessed under the sufficient ties test, which examines UK family, accommodation, work, and prior residence.

What is the 5 Year Rule for Non-Residents in the UK?

The 5 Year Rule states that UK tax residents who leave the country can be treated as temporarily non-resident for up to 5 tax years before certain UK tax charges on gains apply.

• If you leave the UK and become non-resident, you are considered temporarily non-resident for up to 5 tax years.
• Capital gains on assets sold during this period may still be taxed if they were acquired before leaving.
• Remaining abroad for more than 5 full tax years generally removes the temporary non-residence restrictions.

This rule is especially relevant for expats who maintain UK property, investments, or businesses while living abroad.

Am I Still a UK Tax Resident if I Live Abroad?

If you live abroad, you can still be a UK tax resident, unless you spend fewer than 16, 46, or 91 days in the UK per tax year.

• UK tax residency is determined by the Statutory Residence Test (SRT), not by passport or citizenship.
• Frequent visits, owning UK property, or having close family in the UK can make you a tax resident even if you live abroad.
• Temporary non-resident status allows you to reduce exposure to UK taxes for a limited period, especially on capital gains.

Does a Non-Resident Need to Report Foreign Income?

If you are temporarily non-resident, you generally do not pay UK tax on foreign income, but UK-source income and certain gains may still be taxed.

• Foreign income is usually not subject to UK tax while you are temporarily non-resident.
• UK-source income, such as rental income from UK property, must be reported to HMRC.
• Capital gains on assets sold during temporary non-residency may be taxed under anti-avoidance rules if you return within five years.
• Temporary non-residents should carefully track assets and gains to comply with the temporary non-residence rules.

How to Avoid the 60% Tax Trap in the UK?

You can avoid the 60% tax trap by carefully planning your non-residency and timing of asset disposals.

The trap arises when temporary non-residents return to the UK and face high combined taxes on gains realized while abroad.

Strategies to minimize this risk include:

• Timing asset sales carefully to ensure gains are realized during periods of non-residency.
• Remaining non-resident for at least 5 full tax years to fully exit the temporary non-residence rules.
• Using tax-efficient investment structures and seeking advice from qualified UK tax advisors.

Do Non-Residents Get a UK Personal Allowance?

Yes non-residents can still benefit from the UK personal allowance, which is the amount of income you can earn each tax year without paying Income Tax.

While it is generally available only to UK residents, certain exceptions allow non-residents to claim it, such as:

• Citizens of the European Economic Area (EEA) or Switzerland.
• Individuals covered by double taxation treaties between the UK and their country of residence.

For the 2025/26 tax year, the standard allowance is £12,570.

For non-residents, claiming the personal allowance can significantly reduce UK tax on UK-source income, such as rental income or dividends.

Conclusion

Understanding the temporary non-residence rule is essential for expats and UK citizens living abroad.

Careful planning around your time in the UK, asset disposals, and UK-source income can help you maintain non-resident status, reduce tax liabilities, and make the most of available allowances.

Staying informed and keeping accurate records ensures that returning to the UK does not result in unexpected taxes or complications.

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