UK Tax for New Arrivals: When Does the Clock Start Ticking?

How long can someone live in the UK before paying tax? In some cases, up to four years for income and capital gains tax (CGT), and up to nine years for inheritance tax (IHT) — but that depends on the individual’s residence history and future intentions.

New or returning UK residents who have been non-resident for the past ten years may be able to claim the Foreign Income and Gains (FIG) regime. If eligible, they can benefit from four tax years of exemption from UK tax on non-UK income and gains — provided these are not brought into the UK. UK income and gains remain taxable from day one. Once the four-year period ends, worldwide taxation applies.

Inheritance tax exposure builds more slowly. IHT applies to UK assets regardless of residence, but non-UK assets are only brought into scope once someone has been UK resident for ten out of the past twenty tax years. This “long-term resident” status creates an IHT tail, meaning the exposure continues for up to ten years after leaving the UK — depending on how long the individual lived here.

From April 2025, the non-dom regime will be abolished. Long-term residents who previously paid the remittance basis charge will now face UK tax on all foreign income and gains. Transitional reliefs may soften the blow: the temporary repatriation facility allows certain foreign income and gains to be brought into the UK at a reduced tax rate, and some individuals may also qualify for CGT rebasing, if strict conditions are met.

Taxation of offshore trusts will also depend on the residence and relief status of both settlors and beneficiaries. FIG relief may protect qualifying distributions, but if the settlor or beneficiary is UK resident and not eligible, foreign income and gains may be taxed as they arise. Trusts may also fall into the IHT net depending on whether the settlor or life tenant is long-term UK resident.

Determining UK tax residence can be complex. The Statutory Residence Test looks at factors including time spent in the UK, UK accommodation, family, and work ties. Careful planning and early advice are essential — particularly with significant reforms on the horizon.