The UK exit tax is not a single charge but a set of rules that tax capital growth built up while you, your company, or your trust were UK-resident. For individuals, the main provision is the temporary non-residence rule in Section 10A of the Taxation of Chargeable Gains Act 1992, which claws back gains on pre-departure assets if you return within five tax years. Companies and trusts face something sharper: a deemed disposal of every asset at market value the moment their tax residence shifts abroad. And UK property gains remain taxable regardless of where you live. What you actually owe depends on who is leaving, what they hold, and how long they stay away.
When You Count as Non-Resident
Every exit charge hinges on the date your UK tax residence ends, so the Statutory Residence Test is the starting point. Introduced by the Finance Act 2013, the SRT decides your status for each tax year using day counts and ties to the UK such as family, accommodation, work, and time here in previous years.1GOV.UK. Tax on Foreign Income: UK Residence and Tax You are resident if you meet one of the automatic UK tests or the sufficient ties test and fail all the automatic overseas tests.
If you leave partway through a year, split-year treatment can divide the year into a resident and a non-resident portion. Your worldwide gains stay taxable in the resident portion; only UK-sourced gains are taxable in the non-resident portion. You will not qualify for split-year treatment if you spend less than a full tax year abroad before coming back.2GOV.UK. RDR3 Statutory Residence Test
When you leave, complete form P85 to tell HMRC you are going. You do not need to file one if you are already submitting a Self Assessment return for the year of departure.3GOV.UK. Get Your Income Tax Right if You’re Leaving the UK (P85)
The Five-Year Rule for Individuals
Section 10A of the Taxation of Chargeable Gains Act 1992, as substituted by Schedule 45 of the Finance Act 2013, is what most people mean when they talk about an individual exit tax. If you leave the UK, dispose of assets while abroad, and then return within five tax years, gains you realised during the period of non-residence are treated as accruing in the year you return and taxed as capital gains then.4Legislation.gov.uk. Finance Act 2013, Schedule 45, Part 4
The rule only bites if you were UK-resident for at least four of the seven tax years immediately before you left. It catches gains on assets you owned before departure, gains attributed under Section 86 from offshore trusts, and gains attributed under Section 13 from closely held non-resident companies. Assets you both acquire and dispose of entirely while abroad are outside the rule, provided you stay away for the full five years.
So if the plan is to sell shares in a private company, cash in a large investment, or otherwise crystallise a big gain during a short spell abroad, going non-resident briefly will not save any tax. HMRC will assess the gain in the year you return. Only a genuine departure beyond five tax years puts pre-owned assets permanently out of reach of UK CGT.
The Rates You Would Pay
When a gain is caught, it is taxed at the standard capital gains tax rates in force when it is assessed. From 6 April 2025, individuals pay 18 percent if they are basic-rate taxpayers and 24 percent if they are higher- or additional-rate. A separate 32 percent rate applies to carried interest gains for fund managers.5GOV.UK. Capital Gains Tax Rates and Allowances
Gains qualifying for Business Asset Disposal Relief or Investors’ Relief are taxed at 14 percent from 6 April 2025.5GOV.UK. Capital Gains Tax Rates and Allowances The annual exempt amount for individuals is £3,000 for 2025–26, which offsets only a small slice of any substantial gain.6GOV.UK. Capital Gains Tax: What You Pay It On, Rates and Allowances
UK Property Follows You Forever
Even after you leave permanently and the five-year window closes, disposals of UK residential property remain subject to UK capital gains tax. Since April 2019 the same applies to UK commercial property and land. The charge attaches regardless of your residence.
Non-residents must report the disposal and pay any tax due within 60 days of completion, using HMRC’s online Capital Gains Tax on UK property service.7GOV.UK. Tell HMRC About Capital Gains Tax on UK Property or Land if You’re Non-Resident The 60-day clock is strict: you have to report even if no tax is due or you made a loss, and missing the deadline draws interest and a penalty. Double taxation agreements generally do not override the UK charge on residential property, so a treaty in your new country will not rescue you.8GOV.UK. Tax on Your UK Income if You Live Abroad: If You’re Taxed Twice
What Companies Owe on Migration
Companies face an immediate reckoning. Under Section 185 of the Taxation of Chargeable Gains Act 1992, a company ceasing to be UK-resident is treated as having sold every asset it owns at market value the moment before the move and reacquired them at the same value. The resulting gains are taxable even though nothing has actually been sold.9Legislation.gov.uk. Taxation of Chargeable Gains Act 1992 – 185
The deemed disposal covers tangible assets and intangibles like patents, trademarks, and goodwill. For intangible fixed assets, Sections 859 and 860 of the Corporation Tax Act 2009 apply their own exit-charge methodology.10GOV.UK. Corporation Tax: Deferral of Payment of Exit Charges The gain on each asset is its market value on migration less its original tax cost. The charge is taxed at the main corporation tax rate, which is 25 percent for companies with profits above £250,000.11GOV.UK. Corporation Tax Rates and Allowances
Instalment Plans for EEA Migrations
A company moving its residence to an EEA state can apply for a CT exit charge payment plan under Schedule 3ZB of the Taxes Management Act 1970 instead of paying the entire bill upfront. The plan spreads the tax across six equal annual instalments, the first due nine months and one day after the end of the migration accounting period. Interest accrues on the outstanding balance.12Legislation.gov.uk. Taxes Management Act 1970 – Schedule 3ZB
To qualify, the company must be incorporated in an EU or EEA state, transfer its residence to another EEA state, and carry on a business there. The application is due within nine months and one day of the end of the accounting period. HMRC may require security, usually a bank guarantee, if there is a serious risk of non-collection, and can refuse the plan if obtaining the deferral is the main purpose of the migration.13Legislation.gov.uk. Finance Act 2013 – Explanatory Notes
What Trusts Owe on Migration
Trusts sit in almost the same position as companies. Under Section 80 of the Taxation of Chargeable Gains Act 1992, when trustees become non-UK resident they are treated as having disposed of all settled property at market value and reacquired it immediately. The gains are chargeable at the point of migration.14Legislation.gov.uk. Taxation of Chargeable Gains Act 1992 – Section 80 This typically happens when UK trustees retire and are replaced by non-resident trustees.15GOV.UK. Capital Gains Manual CG38200 – Changes of Residence by Trustees: Exit Charge
The trust rate for 2025–26 onward is 24 percent on chargeable gains.5GOV.UK. Capital Gains Tax Rates and Allowances Trustees are personally liable, and HMRC can pursue them individually if the trust has no liquid funds. The deemed disposal covers everything held as settled property, from investments to physical property to unlisted shares. Trusts have no equivalent of the Schedule 3ZB instalment plan, which is limited to corporation tax.
Pensions and ISAs Are Outside the Exit Charge
UK pensions are not caught by the exit-charge rules, but moving one abroad has its own price. Transferring to a Qualifying Recognised Overseas Pension Scheme carries a 25 percent overseas transfer charge on the full transfer amount unless you are exempt. You are exempt if you live in the country where the QROPS is based and the transfer stays within your overseas transfer allowance. Employer-provided QROPS transfers are usually exempt too.16GOV.UK. Transferring to an Overseas Pension Scheme Transferring to a scheme that is not a QROPS can trigger a tax charge of at least 40 percent, and your UK provider may refuse to process the transfer.
An Individual Savings Account can stay open after you leave and keeps its UK tax-free status, but you cannot make new contributions once you are non-resident. If your new country does not recognise ISA shelters, the income and gains inside may be taxable there. For US residents the ISA gets no tax-exempt treatment under US law, and accounts holding pooled non-US investments may be classed as Passive Foreign Investment Companies with punitive US reporting.
Reporting, Valuation, and Deadlines
The core sum is simple: market value on the date residence changes, minus original acquisition cost and allowable improvement spending, equals the taxable gain. The hard part is proving the market value to HMRC.
For property and land, HMRC often works from valuations prepared by RICS-qualified surveyors and can refer disputes to the Valuation Office Agency. An estate agent’s opinion is unlikely to hold up under challenge; a RICS Red Book valuation is the strongest evidence. For shares in unlisted companies, valuation is usually negotiated with HMRC’s Shares and Assets Valuation team.
Individuals report gains on the SA108 Capital Gains Summary pages of the Self Assessment return, filed by 31 January following the end of the tax year.17GOV.UK. Self Assessment: Capital Gains Summary (SA108)18GOV.UK. Self Assessment Tax Returns: Deadlines Companies report deemed disposal gains on the CT600, with payment due nine months and one day after the end of the accounting period in which the exit fell.19GOV.UK. Company Tax Returns Given the five-year non-residence window and HMRC’s ability to open enquiries afterwards, keeping records for longer than the statutory minimum is sensible.20HM Revenue and Customs. RK BK1 A General Guide to Keeping Records for Your Tax Return
What It Costs to Get It Wrong
HMRC charges late payment interest at 7.75 percent per annum from 9 January 2026, running as simple interest daily from the day after the deadline until the payment clears. That rate is the Bank of England base rate plus 4 percentage points, so it will move with the base rate.
On top of interest, failure-to-notify penalties are set as a percentage of the tax lost and scale with how deliberate the failure was and whether you came forward voluntarily. A non-deliberate failure disclosed without prompting within 12 months can attract a penalty as low as 0 percent, rising to 30 percent if disclosure is prompted or late. Deliberate failures range from 20 to 70 percent of the tax lost, and deliberate and concealed failures from 30 to 100 percent. HMRC reduces the penalty based on the quality of disclosure: telling them, helping them quantify what is owed, and giving access to records.21GOV.UK. Compliance Checks – Penalties for Failure to Notify – CC/FS11 If you discover you have missed an exit-related charge, disclosing before HMRC finds it cuts the penalty sharply; waiting until they contact you is the most expensive option.