Is There a UK Exit Tax? What Actually Applies When You Leave

Why people search for a tax that does not exist

The phrase "UK exit tax" gets typed into search engines constantly, and the honest answer is that the thing being searched for is not in the statute book. The UK has repeatedly been described as an international outlier for not charging capital gains on people who cease residence, and proposals to introduce such a charge surface regularly in pre-Budget commentary without becoming law.

That absence is where most people stop reading, and it is the expensive place to stop. The UK does not tax you for leaving. It taxes you, in defined circumstances, for what you do afterwards — and it keeps taxing two categories no matter what you do. The mechanisms that do the work are dated, statutory, and considerably less discussed than the charge that does not exist.

“Almost everyone arrives at this question expecting a one-off bill on the way out, and there isn't one. The risk is not a charge at departure. It is that departure feels like a clean break when the statute treats it as the start of a clock.”

The first tail: temporary non-residence and capital gains

The rule is still universally called section 10A, but that citation is out of date. CG10150 records that Finance Act 2019 rewrote it as sections 1M and 1N TCGA 1992 for disposals from 6 April 2019, with section 1N carrying the treatment of assets acquired during the absence. HMRC states the rewrite "is a re-statement of the pre-existing law and makes no change to the way the pre-existing provision worked", so the mechanics below are unaffected — but anyone relying on pre-2019 commentary should know the section numbers moved.

Its purpose, in HMRC's framing, is to charge gains that accrue while an individual is not UK resident by treating them as accruing in the year that individual resumes UK residence.

Two conditions have to be met before it bites. Per HMRC's guidance at CG26550:

• The period of non-residence is five years or less, measured between the end of the last period of sole UK residence and the start of the period of return; and
• At least four of the seven tax years immediately preceding the year of departure were years of sole UK residence, or split years including a residence period of sole UK residence.

Fail either test and section 10A does not apply. Meet both, and gains realised during the absence are treated as arising in the year of return and taxed then. Temporary non-residence is not confined to capital gains. The concept has a wider statutory home: HMRC records that the pre-SRT rule was repealed and replaced by Finance Act 2013 Schedule 45 Part 4, which reaches certain income as well. The detail has moved: HMRC has relocated its temporary non-residence guidance into the Residence and FIG Regime Manual, and the 2025 abolition of the remittance basis changes what some of those income provisions attach to. Check the current manual for the categories that apply to your years rather than relying on the pre-2025 lists still in circulation.

There is an important limit that materially changes planning, and it is easy to miss. Assets acquired during the period of non-residence are generally outside the scope of section 10A altogether — the rule is aimed at gains on assets held before departure. CG26510 sets out that exclusion, along with the exceptions that survive it: assets held in a non-resident trust or a closely controlled non-resident company, and gains that were rolled over or otherwise deferred before departure and crystallise during the absence.

The carve-out that defeats "just stay away"

Everything above turns on returning. One major category does not.

Non-residents are chargeable on disposals of UK land and property whether or not they ever come back. HMRC's guidance is explicit that a non-resident "must report disposals of UK property or land" even where there is no tax to pay, and it reaches indirect disposals too — rights to assets deriving at least 75 per cent of their value from UK land. Residential, non-residential and mixed use are all within scope.

So for a leaver who keeps a London flat, the five-year clock is not the binding constraint. That disposal is taxable in the year it happens, non-residence notwithstanding.

The second tail: inheritance tax and long-term residence

This is the change most pre-2025 material gets wrong, because the connecting factor moved.

From 6 April 2025, inheritance tax stopped being based on domicile and became based on long-term UK residence. Per IHTM47001, an individual is a long-term UK resident if they have been resident in the UK for at least 10 out of the last 20 tax years immediately preceding the tax year in which the chargeable event, including death, arises.

Read the scope carefully, because it is narrower than the headline suggests. IHTM47001 introduces its summary as covering "when chargeability of foreign property depends on long-term UK residence or domicile", and works through foreign unsettled property and foreign settled property. UK-situs assets sit outside that test and stay within UK inheritance tax permanently. The tail below is a tail on foreign property, not on everything.

The consequence for a leaver is the part that matters:

Where an individual is a long-term UK resident and becomes non-UK resident, they will remain in scope for inheritance tax for a minimum of 3 years and a maximum of 10 years, depending on the amount of time they resided in the UK.

Domicile has not disappeared entirely. It remains relevant for deaths and lifetime transfers before 6 April 2025, where a double taxation convention uses the common-law concept, and for certain settled property depending on when the charge arises or when the settlor died.

What this actually means for sequencing

Put the two tails beside each other and the shape of the problem changes. There is no bill on the way out, but there are two clocks, and they run for different lengths on different triggers:

“The two clocks are not the same length and they are not started by the same event, which is why treating departure as a single decision is where plans come apart. One is answered by how long you stay away. The other is answered by how long you were here.”

Residence itself is not a matter of intention. It is determined by the Statutory Residence Test, set out in HMRC's RDR3 guidance note, which turns on counted days and defined ties. That test is mechanical, which means it can be planned against precisely — and failed by a margin of one day.

For anyone who was previously taxed on the remittance basis, a third workstream sits alongside these two: the Temporary Repatriation Facility addresses pre-6 April 2025 foreign income and gains accumulated under the old non-dom regime, and runs on its own timetable.

What this article does not do

Every figure above is stated as it appears in current HMRC guidance and linked to its source so it can be checked rather than taken on trust. What this article does not do is apply any of it to a set of facts. We do not model whether a given departure date clears the five-year test, and we do not compute an inheritance tax tail, because both answers turn on a residence history we would need to see.

Three things need confirming against the live position before acting:

1. Your residence status for each relevant year under the Statutory Residence Test, which is the input every other answer depends on.
2. Whether assets were held before departure or acquired during the absence, since the two are treated differently under section 10A.
3. Whether any pre-departure gain was rolled over or deferred, because those are carved out of the general exclusion.
4. Whether you hold UK land or UK-situs assets, since neither is answered by waiting out a clock.

This article describes the statutory mechanisms that apply on and after a change of UK residence. It states the position as published in current HMRC guidance and does not substitute for personalised professional advice.