How the UK taxes you after you leave: 2026 non-resident rules, pensions and the lump-sum trap.

By Nick · Europe Unlocked · Every figure sourced to an official body and dated.

Becoming non-resident does not end your relationship with HMRC. It changes it. UK rent, UK property gains and government pensions stay taxed here; your State and private pensions usually move to your new country; inheritance tax follows you for up to ten years; and the 25% tax-free lump sum most people count on is tax-free in exactly one country — the one you are leaving. Here is the 2026/27 rulebook, with the numbers.

1. Becoming non-resident: the Statutory Residence Test

Residence is decided by the Statutory Residence Test (SRT), tax year by tax year, and the tax year runs 6 April to 5 April. The test has three layers, applied in order.

Automatically non-resident if, in the tax year, you spend fewer than 16 days in the UK (fewer than 46 if you were non-resident for all of the previous three years), or you work full-time abroad — fewer than 91 UK days, fewer than 31 of them working more than three hours, and no break of 31 days or more from the overseas work.

Automatically resident if you spend 183 days or more in the UK, or the UK contains your only home (a home available for 91 consecutive days, used on at least 30 days, with no overseas home used on 30 or more days), or you work full-time in the UK.

Otherwise, count your ties. A leaver — someone resident in any of the previous three tax years — is caught by five ties: a UK-resident spouse, partner or minor child; accommodation available in the UK and used; 40 or more UK working days; 90 or more UK days in either of the previous two years; and the "country tie" — more days in the UK than in any other single country. The table is unforgiving:

A day counts if you are in the UK at midnight. Most people who keep a UK house and a UK-resident child and come back for the summer are resident at 91 days. Plan the calendar before you plan the move.

Split-year treatment lets the year of departure be divided into a UK part and an overseas part, so you are not taxed as resident for the whole year. The two cases that matter for movers to Europe: Case 1, starting full-time work overseas; and Case 3, ceasing to have any home in the UK — you must have no UK home for the rest of the year, spend fewer than 16 UK days after leaving, be non-resident the following year, and establish a "sufficient link" with your new country (a home, or tax residence there) within six months. Selling the house and renting abroad qualifies; keeping the UK house "for the kids" generally does not.

Tell HMRC. If you do not file Self Assessment, submit form P85. If you do, the residence pages (SA109) go in with your return — on paper, which means the 31 October deadline, not 31 January.

2. What the UK keeps taxing

Non-residents are taxed on UK-source income only. In practice that means:

• UK rental income. Taxed as before, and collected in advance: under the Non-Resident Landlord Scheme your letting agent or tenant must deduct basic-rate tax (20%) from the rent unless HMRC has approved you to receive it gross — apply on form NRL1. You still file Self Assessment and settle the true liability.
• UK employment duties physically performed in the UK.
• Government-service pensions — see section 3.
• UK savings and dividend income — but with a choice. Under the "disregarded income" rule (HS300) your UK tax can be capped at the tax on your other UK income calculated without the personal allowance, plus whatever was deducted at source on the disregarded income (bank interest, dividends, the State Pension, purchased life annuities). If your only UK income is dividends and interest, that usually means no UK tax at all. Rental income is never disregarded.

The personal allowance survives. British citizens and EEA nationals keep the £12,570 allowance as non-residents; claim it yearly on form R43 or through Self Assessment. It is frozen at £12,570 until 5 April 2031, and the bands are unchanged for 2026/27: 20% to £50,270 of income, 40% to £125,140, 45% above.

3. Pensions: who taxes what

The State Pension is paid anywhere. The annual increase is paid in every EEA country and Switzerland — Portugal, Spain, France, Italy, Greece, Cyprus and Croatia all included — and in the USA. It is frozen in Canada, Australia and New Zealand. The new State Pension is £241.30 a week in 2026/27.

Private and occupational pensions are taxed at source by PAYE until you tell HMRC otherwise. Every UK treaty with a mainstream European destination gives your new country the sole right to tax them; you claim relief on form DT-Individual (Spain and France have their own versions), certified by your new tax authority, and HMRC issues an NT code so the pension is paid gross. Until that code arrives, UK tax is deducted and reclaimed later.

Government-service pensions are the exception. Civil Service, Armed Forces, Teachers, Police, Fire and Local Government pensions stay taxable only in the UK unless you are a national of your new country — most treaties also require residence there, France and Greece add that you must not also be a UK national, and the 2025 Portugal Convention gives Portuguese nationals shared taxation with credit rather than exclusive Portuguese taxation. The table has each carve-out. NHS pensions are not "government" for this purpose — nor are USS, Post Office or Bank of England pensions — and they follow the main rule. HMRC's INTM343040 has the list.

4. The lump-sum trap

In the UK you can take 25% of your pension pot tax-free, up to the Lump Sum Allowance of £268,275. That exemption is a creature of UK law. It does not travel.

Once you are resident in Portugal, Spain, France, Italy, Greece or Cyprus, the treaty hands the right to tax your pension — and HMRC's own guidance (INTM163160) treats a payment of 20% or more of the fund as "likely" to be a lump sum and 50% or more as certainly one — to your new country. And your new country does not recognise a 25% tax-free slice:

• Spain taxes the lump sum as employment income at its progressive rates — on a £200,000 withdrawal that means a large slice at the top marginal rate.
• Portugal treats foreign pension income as Category H income at progressive rates; the IFICI regime excludes pensions, and the old 10% NHR rate is only for legacy holders.
• France offers an escape hatch: an irrevocable election for a 7.5% flat rate, after a 10% deduction, on a pension paid as capital — provided it is not paid in instalments and the contributions were tax-deductible when made (Art. 163 bis CGI). Elect it on the return (boxes 1AT/1BT). Social charges may apply on top if you are in the French health system.
• Italy and Greece bring a foreign lump sum inside their 7% flat-tax regimes for qualifying movers — 7% on all foreign-source income for 10 years in the Italian south (towns up to 30,000 people since 7 April 2026), 15 years in Greece. Outside those regimes, treatment of a foreign lump sum is not settled in an official ruling in either country; get one.
• Cyprus taxes foreign pension income at a 5% election above €5,000 a year (from 1 January 2026); whether a UK 25% lump sum falls within the separate exemption for "pension conversion" lump sums is not confirmed by the Cyprus Tax Department — do not assume it.
• Croatia is the outlier: Article 17(2) of the 2015 treaty keeps lump sums taxable only where the scheme is established, so a Croatia resident's UK 25% stays UK-tax-free.

Three more pension rules that bite after you leave.

• Emergency tax on the first flexible withdrawal. Without a P45, the scheme applies an emergency code on a "Month 1" basis, so a £60,000 first withdrawal is taxed as if you earn £720,000 a year. UK residents reclaim on forms P55, P53Z or P50Z; non-residents cannot use P55 and must claim under the treaty instead — slower, so time the withdrawal.
• Transferring the pension abroad. Since 30 October 2024 the exemption that let transfers to EEA and Gibraltar schemes escape the 25% Overseas Transfer Charge is gone (transitional to 30 April 2025). The charge is still avoided if you are resident in the same country as the receiving scheme — a Maltese QROPS for a Malta resident, say — but it applies to everyone else, and to anything above the Overseas Transfer Allowance of £1,073,100 regardless. For most movers the answer is now to leave the pension in the UK and draw it under the treaty.
• Pensions enter inheritance tax from 6 April 2027. Finance Act 2026 (Royal Assent 18 March 2026) brings unused pension funds and death benefits into the estate for deaths on or after that date; dependants' DB pensions and death-in-service benefits are excluded. Combined with the tail below, a pension you thought was outside IHT may be inside it for years after you emigrate.

5. Inheritance tax: the tail

Since 6 April 2025 UK inheritance tax on worldwide assets is based on residence, not domicile. You are a long-term resident if you were UK resident in 10 of the previous 20 tax years. After you leave, you stay in scope for a tail: 3 years if you were resident for 10 to 13 of the 20, 4 years for 14, 5 years for 15, then one more year for each additional year of residence up to a maximum of 10 years. A lifelong UK resident is exposed on worldwide assets for a decade after emigrating. UK property and UK-situs assets are always in scope. The nil-rate band is £325,000 and the residence nil-rate band £175,000, both fixed until 5 April 2031. Your new country may levy its own inheritance or gift tax as well — Spain and France certainly do — and only the treaty with France (among the countries above) is an IHT treaty; the others resolve double taxation by credit, if at all.

6. Capital gains after you leave

Non-residents pay UK CGT on UK land and property — residential and commercial — and on shares in property-rich companies, at 18% within the basic-rate band and 24% above (2026/27), with a £3,000 annual exempt amount. You must report and pay within 60 days of completion, even if no tax is due. Gains are measured from 5 April 2015 for residential property and 5 April 2019 for commercial (or you can elect for the full gain or time-apportionment). Main-residence relief is available for a year only if you or your spouse spend at least 90 days in the property that year, plus the final 9 months of ownership. Everything else — UK shares, funds, the ISA you sold — is outside UK CGT once you are non-resident, subject to the five-year rule: come back within five years and the gains are taxed on return.

7. ISAs, Premium Bonds and the rest

• ISAs: keep them, transfer them, but no new money once you are non-resident (Crown employees excepted). UK tax relief continues; your new country generally does not recognise it and taxes the interest, dividends and gains inside.
• Premium Bonds: prizes stay free of UK tax; NS&I itself warns that other countries may tax them, and US residents may not be able to hold them.
• Voluntary National Insurance: to keep building State Pension years from abroad you can pay Class 3 at £18.40 a week (£956.80 a year) in 2026/27. The cheap route — Class 2 abroad at £3.65 a week — was abolished for everyone on 6 April 2026, existing payers included (the only survivors are the self-employed covered by a social security agreement and volunteer development workers, at £6.45 a week). New Class 3 applicants need 10 continuous years of UK residence or 10 qualifying years; people who were paying Class 2 can apply for Class 3 without meeting that test if they do so before 6 April 2027. Apply on form CF83.
• Banks: many UK banks close or restrict accounts for EU residents. Open a local account before you need one; keep a UK address for HMRC refunds, which are still paid by cheque to a UK address or nominee.

Questions leavers ask

Is the 25% tax-free lump sum tax-free if I live abroad?

Only in the UK, and only in Croatia among the seven countries above thanks to Article 17(2). Elsewhere the treaty gives your new country the right to tax it and none recognises the 25%. Take it before you go.

Do I still pay UK tax on my pension after moving to Europe?

Not on the State Pension or private pensions, once you have claimed treaty relief on DT-Individual. Government-service pensions stay UK-taxed unless you become a national of the other country.

How many days can I spend in the UK and stay non-resident?

Under 16 days is safe. Between 16 and 182, your ties decide: four ties catches you at 16 days, three at 46, two at 91, one at 121. From 183 you are resident.

Does UK inheritance tax follow me abroad?

Yes — for 3 to 10 years after you leave if you were resident for 10 of the previous 20 years, on worldwide assets. UK property is in scope forever.

Can I keep my ISA?

Yes, but you cannot add to it, and your new country will normally tax what it earns.