Now the dust has settled on UK Chancellor Rachel Reeves's second budget, financial experts have had time to pore over the finer details to work out its real impact.
Ms Reeves opted to avoid big-ticket changes to shore up the UK finances, instead introducing a string of smaller measures.
Freezing income tax, changes to child benefit, property levies and limits for salary sacrifice made the headlines as part of a £26 billion ($34.7 billion) tax-raising package.
For those living abroad, or planning to head to sunnier climes, there was relief that the Chancellor decided not to introduce an exit tax. But there were still some changes of which non-UK residents need to be aware.
Last year, more than a quarter of a million British taxpayers relocated abroad, with many choosing the UAE due to its favourable tax-free status.
Temporary non-resident
Expats who are intending to be away from Britain for only a few years, rather than a permanent relocation, need to be aware of a change to rules regarding income from company ownership.
To ensure there was no quick financial win from moving abroad for a short time, in 2013 the government updated the temporary non-residents rule. It meant that if someone who left the UK returned within five years, certain types of income and gains they might have expected to be tax-free were pulled back into charges.
At the time this affected owners of UK businesses receiving dividends or payments known as distributions for pre-departure profits. Any post-departure profits were exempt from tax.
Essentially, it stopped people with significant amounts of money in their UK company from upping sticks, becoming non-UK resident, receiving a handsome dividend then returning.
Claire Spinks, global head of tax at international financial advisory firm Hoxton Wealth, said: “The government recognised that from an anti-tax avoidance perspective, it didn’t want people building up lots of cash reserves in their company, leaving the UK then pulling them out quickly with little to no tax consequences.”
You can see the “mischief” they were trying to outlaw, she said. “But if somebody left the UK, their company did well after that point, it seemed fair that they could have the tax benefit of being non UK resident.”
However, from April 6, 2026, that tax exemption is being removed.
“If somebody comes back to the UK after that point and they trigger the temporary non-resident rule, then all the distributions for their own companies come back into charge.” She cited the example of someone who runs a company in the UK, moves to Dubai and is able to remain in control due to remote working, then decides to return home after a few years.
“They would always have been taxed on dividends related to profits from before they left, now they will also be taxed on any dividends arising from profits after they left.”
She said people may consider other ways of extracting that cash, either through bonuses or salary, in which case the tax rules of where they are resident would apply.
Deemed tax credit
Britons living abroad may have been of the mindset that dividend income, from owning shares in a UK company, was tax-free.
Actually what was happening is that they were able to place their dividend payouts into a category known as “disregarded income”, a tax-exempt status for certain types of earnings, such as from dividends or bank interest, on the condition they gave up their tax-free personal allowance – currently £12,570 – to which all British citizens are entitled.
A tax adviser would calculate which was more financially beneficial each year – ditching your personal allowance or being taxed on all your UK sourced income, including your dividends, but with the benefit of the tax credit. As there was no cap on the amount of dividends that could be disregarded, it made sense to drop your personal allowance if you expected to receive hefty dividend payouts.
The government abolished dividend tax credits for UK residents in 2016, and has now chosen to abolish it for non-UK residents from April 2026, so they are now in the same situation.
The government said the change would have negligible money-raising effect because of the operational costs in switching systems, but it was intended to improve fairness in the system as UK residents haven’t received a dividend tax credit for some time.
Chris Ball, chief executive at Hoxton Wealth, said the removal of a deeming tax credit for UK dividend income would probably increase UK tax for some non-UK residents. “They may want to look at getting out of UK-based companies,” he said, subject to how long they are away from Britain.
Pension boost
As The National has reported previously, some people living abroad may also have to pay more than five times as much as they currently do to keep their full UK pension due to a crackdown on state benefits.
Those who relocate outside the country will no longer have access to the class two voluntary National Insurance contributions system, which allowed people to pay a weekly amount to plug the gaps in their contributions and still qualify for the state pension. The bill to boost their state pension payouts will change from £182 a year to a £1,000 annual fee.
The shift appears to be aimed at clamping down on foreign workers who live in the UK for as little as three years before returning home, but would also affect UK citizens who move abroad.
Mansion tax
One of the most publicised changes in the budget was the “mansion tax”, or high value council tax surcharge – an annual £2,500 levy on properties valued at more than £2 million, rising to a charge of £7,500 for properties worth more than £5 million.
It has proved controversial, and has been nicknamed a “terrace tax” due to high property values in London, as it means some cash-poor but asset-rich people may struggle to pay the charge. These would include those who bought or inherited properties decades ago but no longer have earning power. Billionaires buying super prime homes would be unlikely to be put off, with one £10.95 million deal moving forward moments after Ms Reeves finished her budget announcement.
The key element to understand is that it is the owner who is liable, not the resident. So if the owner lives abroad and rents out the property, it is still them, not the tenant, who has to pay.
How it will be collected, and how owners will be informed, is yet to be made clear. The policy paper that came out on Budget Day said collection rights would be given to local authorities.
For owners who live abroad, the chances that a local authority could track them down and enforce collection of the levy seems questionable.
Property income tax
Those who rent out a home back in Britain also need to be aware of the change to property income tax. From April 2027, the basic rate will increase from 20 per cent to 22 per cent, while the higher rate will go up from 40 per cent to 42 per cent.
At the same time, a digital self-assessment scheme will mean landlords with income over the thresholds must keep digital records, submit quarterly returns and end-of-year filings.
However, Peter Webb, head of tax at Metis, a Dubai-based wealth adviser, said: “In many ways, this budget will be remembered for the measures that were heavily trailed but that weren’t announced.
“There was no increase to the main rates of income tax, no wealth tax was introduced, no exit tax for leaving the UK, no alignment of capital tax rates with income tax rates, no reduction to the tax-free pension commencement lump sum and no changes to the gifting rules for inheritance tax.”
