Why Expats Return to the UK (And the Costly Tax Mistakes They Need to Avoid)
If you’ve been living overseas for years, there may come a time when you start thinking about returning home.
This guide explains why expats return to the UK, the most common financial and tax traps to watch out for, and what smart planning can achieve.
Why Do Expats Return to the UK?
There’s no single reason why expats return to the UK. For most, it’s a mix of personal, family, health, and financial factors.
Here are the most common reasons long-term British expats choose to return:
1. Ageing Parents
As parents get older, their need for support increases. Many expats come home to help with care or simply to be closer to family during the later stages of life.
2. Access to the NHS
Healthcare abroad can be expensive or hard to navigate. The NHS may not be perfect, but it’s familiar and free at the point of use, making it a major reason why expats return to the UK.
3. Grandchildren and Family
Lots of expats return because they want to play an active role in their grandchildren’s lives. Being a long-distance grandparent is tough.
4. Divorce, Death or Life Changes
A relationship breakdown or the loss of a spouse can be a major turning point. For many, going back to the UK offers a sense of stability.
5. Residency or Visa Issues
Changes in visa rules or permanent residency requirements can force a rethink. Sometimes it’s simpler to come back to the UK than fight to stay abroad.
6. It Is Home
Even after 20 years away, many still see the UK as “home”—I know I do. Familiar language, culture, and weather (even the drizzle 🌧️) can start to feel comforting again.
Then there are the pubs, country walks and the fact that good friends are not moving on to a new country every couple of years.
7. Currency Fluctuations
A weakening Pound can make life abroad more expensive.
8. Retirement Plans
For many, returning to the UK is part of their long-term retirement strategy.
Poll
The Tax Traps Expats Face When Returning to the UK
While the reasons why expats return to the UK are often personal, the financial side of the move often trips people up. Here are the biggest risks:
1. Becoming UK Tax Resident Without Realising
You can become UK tax resident after spending just 16–45 days in the UK, depending on your ties here. This could result in your worldwide income and gains being subject to UK tax.
The Statutory Residence Test is complicated, so it’s easy to get caught out.
The UK uses the Statutory Residence Test (SRT) to determine whether you are a UK resident for tax purposes. Check your status now . . .
2. Becoming Liable for UK Inheritance Tax on Your Worldwide Assets
As a result of new rules that came into effect in April 2025, if you’ve been non-UK resident for more than 10 years, then any assets that you hold outside the UK will be free from UK Inheritance Tax (IHT).
Returning could ultimately mean bringing all your worldwide assets back into the UK IHT net.
3. Poorly Timed Pension Withdrawals
Drawing down your UK or foreign pensions just before or after becoming UK resident again can lead to unnecessary tax.
Done right, you might pay little or no tax. Done wrong, and you could face income tax at 20%, 40%, or even 45%.
4. Selling Overseas Assets After You Return
Capital gains from foreign properties or investments can become taxable in the UK if sold after you’ve triggered UK residency again.
If you sell before your return, the gain may fall outside UK tax.
5. Double Taxation on Overseas Income
UK residents must declare worldwide income. That includes foreign pensions, rental income, and dividends.
Tax treaties may help, but they’re not automatic. You need to claim relief properly, or risk being taxed twice.
6. Outdated Wills and Estate Plans
If your will was written abroad, it may no longer work as intended once you’re back in the UK.
🔗 Global Assets, Local Laws: Navigating Wills Across Borders
Real-Life Case Study: How Bad Timing Cost Susan £25,000
Susan, a 67-year-old British expat, had been living in South Africa for 22 years.
She had moved there in her mid-40s after a career in education and had built a comfortable life with her husband, who sadly passed away in 2021.
With no close family left in South Africa and two adult children now settled in the UK, she decided it was time to return home.
One of her main financial assets was a holiday rental property she had owned for 15 years on the South African coast.
It had provided a steady stream of income and had appreciated in value significantly, by around £90,000 in total.
As part of her plan to return, Susan decided to sell the property and use the proceeds to supplement her pension income.
She arranged the sale shortly after moving back to the UK in April.
The sale completed in July, and the funds were transferred to her new UK bank account.
So far, so good… until tax season arrived.
Susan had assumed that because the property was abroad, and she had lived outside the UK for over 20 years, she wouldn’t be taxed on it in Britain.
But that wasn’t the case.
What Went Wrong
Because Susan was a UK tax resident at the time of sale, the entire gain on her South African property was subject to UK Capital Gains Tax (CGT).
After deducting her CGT allowance, she was left with a taxable gain of around £76,000.
As a basic-rate taxpayer, this meant a CGT bill of just over £25,000.
How It Could Have Been Avoided
If Susan had sold the property before moving back to the UK, the gain would have been outside the scope of UK tax entirely.
Alternatively, if she had delayed her return until the next tax year, or taken advice on the split year treatment, she might have been able to reduce or eliminate the UK tax exposure.
But because she didn’t speak to a financial adviser before making her move home, she missed these planning opportunities.
Lessons Learned
- Tax residency isn’t just about where you live; it’s about timing and triggers.
- Selling overseas assets before becoming UK resident again can lead to big tax savings.
- Split-year treatment may apply, but it’s not automatic and doesn’t always protect you.
- It’s easy to get caught out without expert cross-border advice.
Timeline and Checklist: Planning Your Return Step-by-Step
Returning to the UK after years abroad can be a complex process.
Having a clear plan makes it far easier to manage your finances, tax position, and personal affairs.
Here’s a simple timeline and checklist to help you prepare:
12 to 24 Months Before Returning
✔️ Review your UK tax residency position under the Statutory Residence Test
✔️ Identify any overseas assets you may want to sell while still non-resident
✔️ Consider the timing of pension withdrawals to avoid unnecessary tax
✔️ Review existing wills and estate plans. Will they still work once back in the UK?
✔️ Speak with a cross-border financial adviser to begin structuring your return
6 to 12 Months Before Returning
✔️ Finalise what to do with any foreign property—sell, rent, or retain?
✔️ Check whether you’ll regain access to NHS services on return
✔️ Set up or re-activate UK bank accounts and utilities
✔️ Notify pension and investment providers of your plans
✔️ Assess investment portfolios for UK tax efficiency
0 to 6 Months Before Returning
✔️ Complete relevant HMRC forms
✔️ Register for UK healthcare via your GP
✔️ Notify banks, insurers, and financial institutions of your change in residency
✔️ Confirm State Pension entitlements and whether to top up NICs
✔️ Revisit your budget and cash flow for life back in the UK
This timeline isn’t exhaustive, but it gives you a strong head start.
Planning 12–24 months out gives you flexibility and reduces the risk of unexpected tax bills or financial disruption.
FAQs About Returning to the UK as an Expat
What’s the most common reason why expats return to the UK?
Family is the top reason, whether it’s elderly parents, grandchildren or the desire to be closer to loved ones.
When should I start planning my return?
Ideally, 12 to 24 months in advance. This gives you time to plan pension withdrawals, dispose of assets to maximise tax-efficiency and manage your tax residency carefully.
Will I pay tax on my overseas pensions in the UK?
In most cases, yes. But how and when you take the income can make a big difference.
Do I need to change my will when I move back?
Almost certainly. Wills written under foreign law may not be valid in the UK or may not reflect your new situation.
Can I become UK tax resident just by visiting?
Yes. Even short visits can trigger UK residency depending on your ties and travel history. Use the Statutory Residence Test to be sure.
Will I be taxed on my overseas bank interest when I move back to the UK?
Yes. Once you’re a UK tax resident again, all worldwide interest income must be declared and is taxable in the UK.
What happens if I still have property abroad after returning to the UK?
You may need to declare rental income or pay UK capital gains tax if you sell the property while UK resident. Double tax relief may apply, but it depends on the country and timing.
Can I claim split-year treatment when returning to the UK?
Possibly. If you meet certain criteria, the tax year may be split into a UK and non-UK part.
Will returning to the UK affect my non-UK spouse or partner’s tax position?
Yes. If you share assets or income, their residency and tax status may also need to be reviewed. Estate planning could also be impacted if you hold joint assets.
Will returning to the UK affect my IHT position?
Potentially. If you’ve been outside the UK for more than 10 years, then any non-UK assets that you hold will be free from UK Inheritance Tax (IHT). Returning could ultimately mean bringing all your assets worldwide into the UK IHT net.
Can I still use my offshore investment bond once I’m back in the UK?
Yes, but it may no longer be tax-efficient. UK residents are taxed differently on offshore bonds, so it’s worth reviewing before you return. What is an Offshore Bond? An Expat Guide
Will I qualify for the UK personal allowance when I move back?
Yes. You will be entitled to the standard personal allowance unless you exceed income thresholds.
Do I need to tell HMRC that I’ve returned?
Yes, you should notify HMRC.
What happens to my non-UK company or business if I move back?
If you continue to own or manage it, you may have UK tax obligations on profits or dividends. This area can be complex and requires professional advice.
What if I’m only coming back temporarily?
Even a temporary return can trigger UK tax residency depending on how long you stay and your ties. Plan your visit carefully if you want to remain non-resident.
Additional Reading
Coming Home: 10 Financial Steps for Expats Returning to the UK
What should I do with my offshore investments when returning to the UK?
What is an Offshore Bond? An Expat Guide
Moving Back to the UK? Here’s What the New Tax Rules Mean for You
Planning to Return to the UK? How the 2025 IHT Changes Could Affect Your Estate
Navigating the UK Temporary Non-Residence Rules: A Guide for Expat
Why Expats Return to the UK (And the Costly Tax Mistakes They Need to Avoid)
Final Thoughts: Planning Your Return Properly
There are many good reasons why expats return to the UK. But while the emotional side can feel right, the financial side can be full of traps.
The biggest mistakes are usually around timing — when you return, when you draw pensions, and when you sell foreign assets.
With good advice and careful planning, you can avoid unexpected tax bills and structure your return in a way that protects your wealth.
If you’re considering a return to the UK, I can help you:
- Understand your residency position
- Plan tax-efficient pension withdrawals
- Structure asset sales for minimum tax
- Update wills and estate plans
- Avoid unnecessary tax on overseas income
Check out Return Ready Roadmap™. It is my dedicated service for expats returning to the UK.
Ross is a qualified Chartered Financial Planner and Pension Transfer Specialist.
He has been a cross-border financial adviser for 25 years and specialises in helping British expats manage their finances with clarity and peace of mind.
If you would like to have a no strings chat with him, please get in touch.
