The UK Temporary Non-Resident Rule

7th May 2026

INTRODUCTION

Welcome!

Section 1

Circumstances

1. The individual was UK-resident before leaving

You must have been UK resident in at least 4 of the 7 tax years

immediately before the year you became non-resident

2. The individual becomes non-UK resident under the

Statutory Residence Test

You must be non-UK resident under the SRT for one or more

tax years.

This typically happens by:

• Leaving the UK to work full-time overseas, or
• Significantly reducing UK days and UK ties

3. Period of non-residence is short

You must be non-UK resident for fewer than 5 complete tax years.

If you are non-resident for 5 complete UK tax years or more, you are

not temporarily non-resident.

• These are tax years between the last year of UK residence and the

year of return

• Part years at each end don’t count toward the 5-year threshold

4. The individual becomes UK-resident again

You must subsequently return to UK tax residence under the

Srt.

Only on return do the temporary non-residence rules actually

bite.

Section 2

Income Tax

What are the Income Tax consequences of being a TNR?

In the UK, “temporary non-residence” does not itself trigger

income tax while you are abroad.

The Income Tax consequences arise only if and when you return

to UK residence,

• and only for specific, targeted types of income that were

received while you were non-resident.

While non-UK resident, you are not charged UK Income Tax on

most foreign income.

You are taxed only on:

• UK-source income (e.g. UK property income).
• Specific UK employment duties.
• Other limited UK-source items.

Temporary non-residence does not change this

Should you return permanently to the UK, HMRC can ‘claw back’

certain income received while you were non-resident:

• Distributions from close companies
• Employment-related securities income
• Pension-related income
• Trust income

Section 3

Capital Gains Tax

What are the Capital Gains Tax consequences of being a TNR?

If you become temporarily non-resident, certain capital gains

made while you were non-resident are taxed when you return to

UK residence, as if they arose in the year of return.

This is an anti-avoidance measure to prevent individuals from:

Leaving the UK temporarily

Disposing of assets while non-resident (and outside UK CGT)

Returning to the UK having avoided tax

When Do the CGT Rules Apply?

You must meet all four conditions:

Prior UK Residence

UK resident in at least 4 of the 7 tax years immediately before the year you became

non-resident

Become Non-UK Resident

Non-UK resident under the Statutory Residence Test for one or more complete tax years

If you stay abroad for 5 complete tax years or more, the CGT charge does not apply

Return to UK Residence

You subsequently return to UK tax residence

Which gains are caught?

Assets Owned Before Departure

Gains on assets you owned before leaving the UK are taxable on your return if disposed of during temporary non-residence.

Key assets typically affected:

• Shares and securities (including in private companies)
• Investment properties (excluding your main residence)
• Business assets
• Crypto assets
• Valuable chattels (art, jewelry, etc.)

Critical timing:

The asset must have been:

• owned when you were UK resident (typically before leaving)
• Disposed of while temporarily non-resident
• Gain is taxed in the year you return

Main Residence - Partial Relief Your principal private residence (PPR) has special protection. If you dispose of

your only or main residence while temporarily non-resident:

• PPR relief may still apply for periods when it was your actual residence
• The temporary non-residence charge does not override PPR relief
• But any non-exempt portion of the gain would be caught

Example:

• Own home for 10 years while UK resident
• Become non-resident, live abroad for 3 years
• Sell the property while non-resident
• Return to UK in year 4
• PPR relief applies for the period it was your actual home
• Any taxable gain (e.g., from letting) is charged on return

Assets Acquired While Non-Resident

Not normally caught - the temporary non-residence rules typically apply only to:

• Assets owned before departure, or
• Assets that derive from assets owned before departure (e.g., shares from a

reorganization)

• Assets purchased while abroad and sold while abroad are generally outside

UK CGT entirely.

Section 4

Amounts Classed As Income

Which amounts are classed as income under the TNR rule?

Dividends and Distributions – ( shares, options & securities)

• Paid by a close company.
• The distribution is received while the individual is non-UK resident.
• The individual had a material interest in the company before leaving the UK.
• The individual returns to UK residence within 5 complete tax years
• These amounts are taxed as income in the tax year of return, not when received overseas.

Certain employment income (UK-linked or deferred) The following employment-related receipts can be classed as income under the temporary non-residence rules:

• Deferred remuneration (e.g. bonuses)
• Termination payments
• Earnings that relate to UK duties performed before departure

General deferred bonuses are not automatically caught.

Need specific connection to UK duties or employment-related securities.

Termination payments

Only certain termination payments relating to UK employment.

Not a primary TNR income category.

Earnings that relate to UK duties performed before departure

Important to look at when these were paid, not just when earned.

Certain pension payments

The rules apply to specific pension-related income, including:

• Unauthorised pension payments
• Certain lump-sum withdrawals
• Some chargeable pension receipts structured to fall outside normal UK tax

during non-residence. (These can be taxed as income when UK residence

resumes).

Chargeable event gains (life policies)

The following are treated as income if realised while temporarily non-resident:

• Gains on UK life insurance policies
• Capital redemption policies
• Certain annuity contracts

Capital

Which amounts are classed as Capital under the TNR rule?

ASSETS OWNED BEFORE DEPARTURE Shares and Securities

• Quoted shares (UK and overseas)
• Unquoted shares (private company shares)
• Employee share schemes (shares acquired through employment)
• Investment funds (OEICs, unit trusts)
• Bonds (corporate bonds, unless exempt)

Investment Property

• UK residential property (not your main residence)
• UK commercial property
• Overseas property
• Land

ASSETS OWNED BEFORE DEPARTURE Business Assets

Trading business assets

Partnership interests

Goodwill

Intellectual property (patents, trademarks owned before departure)

ASSETS OWNED BEFORE DEPARTURE Cryptocurrency and Digital Assets

Bitcoin, Ethereum, and other crypto

NFTs (Non-Fungible Tokens)

Digital tokens

If owned before departure and disposed of while non-resident

ASSETS OWNED BEFORE DEPARTURE Valuable Chattels

Art and antiques (worth >£6,000)

Jewelry

Classic cars

Collectibles (wine, stamps, etc.)

Standard CGT chattels rules apply

ASSETS OWNED BEFORE DEPARTURE Other Capital Assets

Debts and loans (if creating chargeable gains)

Rights and options owned before departure

Foreign currency (in certain circumstances)

Main Residence (Principal Private Residence)

Your only or main residence has important protection:

PPR Relief Applies:

Private Residence Relief (PRR) is not overridden by TNR rules

Gains attributable to periods when it was your actual residence are

exempt

Final period exemption (currently 9 months) applies

Example 1 - Full Relief:

• Own home for 8 years while UK resident
• It’s your only/main residence throughout
• Leave UK April 2023, sell property June 2023 while non-resident
• Return April 2024

Gain fully exempt under PPR - TNR doesn’t apply

Example 2 - Partial Relief:

• Own home for 10 years: 7 years residence, 3 years let out
• Leave UK April 2023
• Sell while non-resident in 2024
• Return 2025
• 30% of gain taxable in 2025/26 (3/

Dr. Peter Wilson-PB First FZ-LLC

 PB First FZ-LLC: Formed in the UAE in 2016 and advises on domestic and international tax.

 Qualifications: Dr. Wilson has a PhD in International Taxation from University of London in

2018. Also qualified in law, accounting and tax.

 Experience: Dr Wilson has more than 40 years experience in domestic and cross border taxation

including inhouse, investment banking and professional including many years as a senior EY international tax partner of the Australian, US and UK firms and a senior PwC international tax

partner based in London.

 Clients: The PB First FZ-LLC clients include funds, companies, foundations, partnerships, trusts, UHNWI and governments on taxation, dispute resolution and compliance covering more than 50

countries.

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