Become UK tax resident and the UK taxes your worldwide income. But new arrivals get something Portugal and Spain don't offer: four tax years with no UK tax on foreign income and gains. Here's how it works in 2026/27 — and what Americans and Canadians keep owing back home.
Figures verified 3 July 2026The Statutory Residence Test decides. Spend 183 or more days in the UK in a tax year and you're automatically resident. Fewer than 16 days and you're automatically not (46 if you were non-resident for the prior three years). In between, a "sufficient ties" test counts your connections — home, family, work — against your day count (HMRC RDR3). Most people who move here full-time are resident from arrival. Plan on it.
These are the rates for England, Wales and Northern Ireland (HMRC):
| Taxable income (above allowance) | Band | Rate |
|---|---|---|
| Up to £12,570 | Personal allowance | 0% |
| £12,571 – £50,270 | Basic | 20% |
| £50,271 – £125,140 | Higher | 40% |
| Above £125,140 | Additional | 45% |
The personal allowance is frozen at £12,570 until April 2031 (Autumn Budget 2025), and tapers away £1 for every £2 of income over £100,000 — it's gone entirely at £125,140.
This is the UK's big draw for new arrivals. Since 6 April 2025 (it replaced the old "non-dom" rules), anyone who has been non-UK-resident for 10 consecutive years can elect, for their first four tax years of residence, to pay no UK tax on foreign income and gains — pensions, dividends, interest, capital gains arising outside the UK (HMRC). Nearly every genuinely new arrival from the US or Canada passes the 10-year test.
The mechanics: you claim year by year through Self Assessment, and the claim deadline is 31 January in the second year after the tax year ends — a 2026/27 claim is due by 31 January 2029 (HMRC HS266). Claiming costs you that year's personal allowance and capital gains exempt amount — usually a trivial price against four years of sheltered foreign income. UK-source income (a UK salary, UK rent) is taxed normally throughout.
The US–UK tax treaty (2001) does the heavy lifting here — and it's mostly good news:
Under the Canada–UK treaty, CPP, OAS and pensions paid to a UK resident are taxable only in the UK (Article 17); annuities can carry up to 10% Canadian tax (HMRC DT4610). Lump-sum RRSP/RRIF withdrawals may not get treaty relief — same specialist-advice flag as the US side.
The US taxes citizens on worldwide income wherever they live. The Foreign Earned Income Exclusion is $132,900 for 2026 (IRS) — but it covers earned income only, so retirees rely on foreign tax credits instead. FBAR filing kicks in once foreign accounts exceed $10,000 aggregate; FATCA Form 8938 at $200,000 (single, living abroad; $300,000 year-end peak; both doubled for joint filers) (IRS).
| Income type | Allowance (2026/27) | Rate |
|---|---|---|
| Capital gains | £3,000 exempt amount | 18% basic-rate / 24% higher-rate (HMRC) |
| Dividends | £500 allowance | 10.75% / 35.75% / 39.35% — basic and higher rates rose 2 points on 6 April 2026 (HMRC) |
| Savings interest | £1,000 basic / £500 higher / nil additional | Income tax rates; savings and property rates rise 2 points from April 2027 (announced, pending) |
| ISA | £20,000/yr | Tax-free in the UK. From 6 April 2027 the cash-ISA portion is capped at £12,000 for under-65s — 65+ keep the full £20,000 (HM Treasury) |
Since 6 April 2025 IHT is residence-based. Once you've been UK resident for 10 of the last 20 tax years you're a "long-term resident" and your worldwide estate is in scope. Before that, only UK assets are. The rate is 40% above the nil-rate band of £325,000 plus the £175,000 residence band — roughly $660,000 combined, both frozen to April 2031 (HMRC). Leave the UK later and an "IHT tail" follows you for 3–10 years.
The new State Pension is £241.30/week in 2026/27 (~$319) after the 4.8% triple-lock rise. You need 10 qualifying years of National Insurance for anything, 35 for the full amount; voluntary Class 3 contributions cost £18.40/week (GOV.UK). If you'll work in the UK, even a partial record is real money later.
Americans: a US–UK totalization agreement exists — credits from both countries can be combined to qualify for benefits (SSA).
Social Security, IRAs, 401(k)s, Roths, and the lump-sum problem — what's settled and what's contested.
Who qualifies, what a claim costs you, and how to use four tax-free years deliberately.
The 10-of-20-years rule, the frozen bands, and the planning moves that only work early.
FTC vs FEIE, FBAR, FATCA, and the PFIC rules that shape what you can invest in.
US and Canadian tax obligations don't stop at the border. We'll match you with a cross-border tax adviser we've checked ourselves — credentials, licensing, and real client outcomes in the UK.