The GSB Guide to repatriation to the UK
This guide, written by GSB Wealth, will give you a better idea of what you need to start preparing for repatriation to the UK so you can avoid any nasty and expensive surprises in the future.
Should you sell assets before repatriating?
If you have time on your side, then start looking at your financial affairs 12 to 18 months before your actual repatriation. If you have assets to sell and profit to release, it makes sense (from a capital gains tax perspective) to do this before returning home. Moving home on or after April 6th is a great way to simplify your tax situation. However, even the best-laid plans seldom come to fruition. Having the luxury of choosing your exact date of return is unlikely. Suppose you have assets such as property, and you can’t or don’t want to sell before you move. In that case, additional planning opportunities are available to mitigate potential tax on asset income.
Everyone’s circumstances are different. Repatriating may not be as complex for you as long as you take good financial and tax advice from a professional.
Retiring back to Britain
If you transfer your funds or take benefits from your QROPS, the scheme has to report payments to HMRC, regardless of how long you were a non-UK resident previously.
If you’ve started drawing an income from a pension scheme while abroad, you will be liable to tax in the UK on your income once you return to Britain. (Regardless of whether yours is a UK registered pension scheme such as a SIPP or whether it’s a QROPS).
It is very important to seek advice at this stage to ensure that the level of income drawn from your pension, along with other assets, is done as tax efficiently as possible.
For example, you may be able to offset tax liability by drawing down a portion from the pension commencement lump sum, using tax-deferred 5% withdrawals from an offshore bond, using the CGT annual exempt amount, and transferring assets between spouses if one is a higher or additional rate taxpayer, etc. You have choices and options – but you must seek advice before your return to Britain. Otherwise, you limit all your choices and options.
Read more about UK expat pension planning.
How are funds taxed in the UK?
If you’re UK-domiciled, have properly ceased UK residence and are not ordinarily resident in the UK (i.e., an expat), you can bring funds into the UK without a UK income tax charge. But, if you’ve been an expat for less than five years, beware of the temporary non-residence rules. These could see gains, realised during your absence, taxed on your return. If you think you may be resident in the UK, UK-domiciled, but not ordinarily resident, you will need to seek professional advice as your tax position is complex.
How to make and receive an international transfer
You will need to have a bank account in the UK if you want to receive funds from abroad. Simply supply the bank you’re transferring from with the following details about the account you’re transferring to:
- Your personal details
- Your bank’s SWIFT code
- IBAN (international bank account number) number
- BIC (business identifier code) when requested.
Don’t forget currency exchange issues
Income Tax
Liability for tax in the UK is determined by residence and domicile status. If you’re a tax resident in the UK you’re liable to UK tax on your worldwide income.
As a non-resident expat you’re subject to tax on UK-source income only, such as rental income from UK properties, UK pension income etc. Where you are subject to UK income tax, the amount you pay will depend on your income level, which falls into each tax band.
Everyone has a personal allowance of £12,570 (2024 -2025), which you do not have to pay tax on. In terms of registering your arrival back in the UK with the taxman. “You may need to register for Self Assessment, e.g. if you start working for yourself or have other income or gains from the UK or abroad. You don’t need to register if you’re an employee and don’t have other untaxed income to report.”
You can find out more about self-assessment and who needs to send a tax return on HMRC’s website.
If you’re returning to the UK and taking up a job offer, you will likely need to fill in a Starter Checklist form from HMRC. This is for employees without a P45 (the form you’re given at the end of a period of employment in the UK, which provides details of your tax code, gross pay, and the tax paid for that year).
This Starter Checklist replaced the old P46 and gets you back on the taxman’s radar. Until your tax situation is clarified, you may also have to have an emergency tax code. Apply for both via HMRC’s website. For income tax, you are generally treated as a resident for the whole tax year. Therefore all income received in the tax year you become a UK resident will be subject to UK income tax.
There is, however, an extra-statutory concession for income tax which allows a ‘split-year treatment to be applied. That means income arising in the tax year of return (but before the actual return date) will not be subject to UK income tax. The rules for this are quite different to those applying capital gains treatment. And, income tax split year treatment is only available when an individual leaves or returns to the UK for work.
National Insurance
National Insurance contributions (NICs) are payable for you to qualify for certain benefits, including the state pension. You can make voluntary contributions while you’re abroad. However, if you haven’t done so and want to catch up once you repatriate, you can check your NI record online. You’ll also be able to find out how any gaps you have may affect your future entitlement to benefits. The type of NICs you pay depends on your employment status and earnings. If you’re employed, stop paying Class 1 National Insurance when you reach the state pension age. If you’re self-employed, stop paying Class 2 when you reach state pension age. And you stop paying Class 4 from the start of the tax year after you reach the state pension age and stop paying Class 4 from the start of the tax year after you reach the state pension age.
The rates and rules for National Insurance contributions are aligned with the income tax thresholds, with the Upper Earnings Limit set at £50,270.
Capital Gains Tax
When repatriating to the UK, it’s important to understand the implications of Capital Gains Tax (CGT) on your assets. CGT is charged on any profits (the ‘gains’) you make when you sell or transfer assets such as shares, unit trusts, or property that is not your main residence.
For the tax year 2024-2025, the annual CGT exemption has been significantly reduced to £3,000. This means you can make gains up to this amount each year without incurring CGT. Any gains above this threshold are subject to tax.
The CGT rates for the 2024-2025 tax year are as follows:
- Basic rate taxpayers: 10% on gains that fall within the basic income tax band.
- Higher and additional rate taxpayers: 20% on gains that fall above the basic income tax band.
- Residential property (not your main residence): 18% for basic rate taxpayers and 28% for higher and additional rate taxpayers.
To minimise your CGT liability, consider the timing of your asset disposals and the use of any available reliefs or exemptions. It’s advisable to review your investments and assets well in advance of your return to the UK and seek professional advice to optimise your tax position.
Inheritance tax (IHT)
Inheritance tax (IHT) may be levied on the estate of a deceased person who was domiciled in the UK or who was not domiciled in the UK but who owned assets there. This means it can apply to the assets of deceased expats. Domicile is distinct from residency, meaning that IHT applies to UK-domiciled individuals regardless of where they reside. The IHT threshold (or nil rate band – NRB) is the amount up to which an estate will have no IHT to pay. The amount of the NRB is currently £325,000 per individual. Assuming you’re a British expat, you’re likely to be a UK-domiciled individual whose estate could be liable to IHT. So you may want to consider taking advantage of certain IHT exemptions.
Potentially Exempt Transfers (PETs)
PETs are gifts that potentially qualify for an exemption and are made, in general, to either an individual or an absolute trust. A potentially exempt transfer will only become chargeable to IHT if the donor fails to survive for seven years from the gift date. In this instance, it is regarded as a failed PET.
On death within seven years of the gift, the value of the failed PET is added to the donor’s estate, along with any other gifts made by the donor in the seven years before death. Only where the value of the failed PET, when added to any earlier gifts within seven years, exceeds the prevailing NRB (£325,000 in the current tax year) will IHT become payable on the failed PET.
If there is an IHT liability on the PET, this may be reduced by taper relief if the donor has survived at least three years from the date of the gift. The relief is calculated as a percentage reduction of up to the full IHT rate depending on the time between the gift and the date of death.
- 0-3 years from gift - 40% Taper Relief
- 3-4 years from gift - 32% Taper Relief
- 4-5 years from gift - 24% Taper Relief
- 5-6 years from gift - 16% Taper Relief
- 6 -7 years from gift - 8% Taper Relief
- 7+ years from gift - 0% Taper Relief.
UK property for expats returning to live in Britain
If you’ve been away from the UK for a long time, things may have changed significantly concerning getting a rental contract or a mortgage. Most letting agents require references from previous landlords and will run a credit check on you before allowing you to rent a property.
As a returning expat, you can fall at each of these hurdles. You may not have up-to-date references, and your credit history may not reflect your current or recent earnings. If you’re returning to a job, this can help. You will be able to show proof of earnings (albeit anticipated earnings), a contract and a reference from your employer. However, if you’re returning for retirement, self-employed or currently unemployed, this can make things more challenging.
Many letting agents will consider your application favourably if you can pay a lump sum for rent in advance. Most private rented tenancies are let on an assured short-hold basis (AST). This means your landlord has the right to bring your tenancy to an end after its fixed term. If the tenancy does not have a fixed term, they can bring it to an end after six months. You will be required to pay a deposit upfront (usually 1 or 2 months’ rent), and it would be sensible to have contents insurance in place. And if you are returning with pets, your options are likely to be more limited, so start searching early if this is the case. (You may also need to pay a pet deposit).
Buying UK property – proof of funds
When buying property, a very important part of the conveyancing process is understanding the source of the purchaser’s funds. As an expat or recent repatriate, you may be asked for additional proof if you bring money in from overseas (and/or your funds were earned or accrued overseas).
Solicitors handling the conveyancing process are guided by Money Laundering Regulations 2017, which mention the source of funds in two places:
- Regulation 28 (S11(a)) - Scrutinise transactions undertaken throughout the course of the relationship (including, where necessary, the source of funds) to ensure the transactions are consistent with the relevant person’s knowledge of the customer, his business and risk profile.
- Regulation 35 (S5(b)) - Take adequate measures to establish the source of wealth and source of funds which are involved in the proposed business relationship or transactions with that person.
Furthermore, the Law Society states;
“In many ways, client identification and verification is secondary in anti-money laundering compliance to understanding the source of funds.”
Cash is not an acceptable option. The onus is on you to prove your funds are not from the proceeds of crime, and if your solicitor has doubts, they are obliged by law to report you for suspicion of money laundering. For this reason, have as many wage slips, bank statements, contracts, etc.
However, be aware that the receiving bank in the UK may also require proof of the source of funds before clearing them This again takes time. Be prepared to answer questions about particular transactions on your bank statements, too, especially if they are frequent payments or large transactions. A delay in the process could cost you the property of your dreams.
Getting a mortgage
Most big-name lenders in the UK make getting a mortgage for a repatriating Briton difficult.
The first hurdle? Not having a UK address in the last three years. Mainstream lenders carry out a credit score. You probably won’t have enough points without a recent UK address, and will be declined.
Fortunately, there are other lenders who credit check instead of credit scores and assess cases individually. Underwriters for these firms will look at your credit record to ensure that there is nothing untoward in your financial background.
And they won’t care so much about the fact you’ve been living abroad. Assuming all is well with your credit check, you have a deposit and can prove you can meet repayments, you should be able to find a willing lender. If you’re currently abroad and you’re planning to return and buy a property within the first year or so, these steps might help you plan:
1. Keep a correspondence address in the UK
Council tax
Electoral register
Insurance
Importing your personal effects and pets
Depending on where you’ve been living and how many possessions you’ve acquired, you may be able to return with just a suitcase. Chances are. However, you will require a container.
If you’re likely to return before your belongings, pack carefully to ensure you have the essentials you need while the rest is in transit. Also, plan to live in the UK without all your things for some duration and get Customs clearance. You will need a valid visa and a declaration form to bring your personal effects into the UK. You will also be required to list all the items brought into the country.
You will have to estimate acquisition dates and current values, and any items that you bought between six to twelve months before moving back to the UK may be subject to VAT charges. Remember that no liquids or consumables can be brought back via shipping containers, including toiletries and even candles. Otherwise, your personal belongings should be considered duty-free.
Those with large or many possessions will find it much easier to employ an international removal company or a separate import agent service and removal company. The agent and the international removal company will have the expertise and experience required to help your importation smoothly.
Fees charged will vary and depend on the cubic volume of effects to be returned, the container size, the place of origin and the ultimate destination. It’s wise to get a few quotes and to plan well in advance because shipping times can be long.
Tip: You can get a good deal if you are willing to share a container with other movers. So ask your relocation company for details.
You will have to pay a fee for the customs clearing agent who looks at your shipping container. And include copies of your passport and visa for the customs agent too.
Any delays on arrival at UK customs could be chargeable to you for storage, and of course, your goods may be subject to random checks.
It is possible to import medication, although customs will require all medication to be in its original labelled container with English instructions. Some medicine, such as controlled drugs, will require a doctor’s letter and a personal licence, and the amount allowed in will be restricted.
Importing vehicles
You have 14 days to inform HMRC that your vehicle has arrived in the UK. Your vehicle also needs to meet UK driving and safety standards. A European Certificate of Conformity and a Mutual Recognition Certificate are required for vehicles imported from the EU. A new car will require additional VAT, duty, tax payments, and registration once it arrives. HMRC sets VAT, and the registration department will determine the vehicle tax to be paid. A NOVA form and DVLA registration will be required for vehicles imported from any country, not in the EU. VAT and vehicle tax must also be paid.
Bringing your pets home
The rules around live animal importation are fairly easy to understand and navigate. It’s wise to seek the help of a specialist transportation company to ensure your pets are cared for in transit. They also ensure all required documentation is in place to avoid enforced quarantine on arrival.
In the case of dogs, cats, and even ferrets, this is what the government has to say:
You can enter or return to the UK with your pet if it:
- has been micro-chipped;
- has a pet passport or third-country official veterinary certificate; and
- has been vaccinated against rabies - it will also need a blood test if you’re travelling from an unlisted country.
Dogs must also have a tapeworm treatment. Your pet may be put into quarantine for up to 4 months if you don’t follow these rules – or refused entry if you travel by sea. You’re responsible for any fees or charges.
It’s also worth checking with different airlines to see how they treat animals in transit, as some have much more favourable reviews than others. Bear in mind you may need to fly your pets, or all of you if you want to travel together, into a different airport in the UK than you had planned, as not all airports accept animals and the costs can vary widely as not all airports accept animals and the costs can vary widely.
Accessing the NHS
If you return to the UK and become unwell before registering for a GP surgery, you can, of course, dial 999 or visit an accident and emergency hospital department. Alternatively, 111 is the number for medical help and advice.
The NHS is a residence-based healthcare system. This means the free provision of NHS treatment is based on whether you’re ordinarily resident in the UK or not. It doesn’t depend on a person’s nationality, payment of UK taxes or national insurance contributions, owning a property in the UK, or even being registered with a GP or having an NHS number. Therefore, as a British citizen returning to live in the UK, you will be immediately entitled to free NHS care. Only if you reside exclusively and permanently overseas and are visiting the UK may you be charged for treatment.
Registering with a doctor
Finding a dentist and ‘Denplan’
Depending on how long you’ve been away from the UK, you may be unaware that seeing an NHS dentist can be extremely difficult.
Many UK residents now have private dental insurance. Using the NHS Choices website, you can search and see if there are any dentists near you offering NHS treatment. Those that do also often offer private practice as well. Make sure you clarify what you will be eligible for as an NHS patient before agreeing to any treatment. Your dentist should be able to outline what may be covered and what you may have to subsidise, as some procedures aren’t offered on the NHS anymore.
If you can, take any record of dental treatment carried out while living overseas home with you that will be a benefit to your new dentist in the UK. If you need to see a dentist urgently before you’ve registered with one, dial 111 for assistance. Many returning expats report feeling disconnected when they return ‘home’ to a country that no longer feels like home.
A lot may have changed in Britain since you left, and it’s not uncommon to find adjusting hard. If you anticipate and accept that you might experience a degree of reverse culture shock, it may help you adjust to your return more quickly. The good news is most government agencies, councils and service providers in the UK have embraced technology, and everything you’re likely to need is available online.
At GSB, we explore all the different aspects of your goals, taking everything into account to create a financial plan that works for you throughout life’s events.
FAQs
Reviewing and potentially selling assets 12-18 months before repatriation is advisable to minimise capital gains tax. However, if selling isn't possible, planning can mitigate potential taxes on asset income.
Funds brought into the UK are not taxed if you've been a non-resident for over five years. However, gains realised during temporary non-residence (less than five years) may be taxed upon return.
UK tax applies to pension income once back in the UK, regardless of the pension scheme type. Seek advice to manage income tax efficiently, using options like tax-deferred withdrawals or spousal asset transfers.
Capital gains tax (CGT) is charged on profits from asset sales above the annual exemption (£3,000 for 2024-2025). Rates are 10% for basic rate taxpayers and 20% for higher/additional rate taxpayers, with higher rates for residential property gains.
National Insurance contributions (NICs) ensure eligibility for certain benefits, including the state pension. Voluntary contributions while abroad and reviewing your NI record upon return can address any gaps in contributions.
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Disclaimer
THIS PAGE DOES NOT CONSTITUTE TAX OR LEGAL ADVICE AND SHOULD NOT BE RELIED UPON AS SUCH.
THE TAX TREATMENT IS DEPENDENT ON INDIVIDUAL CIRCUMSTANCES AND MAY BE SUBJECT TO CHANGE IN FUTURE. FOR GUIDANCE, SEEK PROFESSIONAL ADVICE.
THE VALUE OF YOUR INVESTMENTS (AND ANY INCOME FROM THEM) CAN GO DOWN AS WELL AS UP, WHICH WOULD HAVE AN IMPACT ON THE LEVEL OF PENSION BENEFITS AVAILABLE.
THE INFORMATION ON THIS WEBSITE IS DIRECTED ONLY AT PERSONS OUTSIDE THE UNITED KINGDOM AND MUST NOT BE ACTED UPON BY PERSONS IN THE UNITED KINGDOM.