British expatriates returning to the UK from the Gulf: key tax and residency considerations

At a time when families are understandably focused on safety and stability, it is easy to overlook how quickly UK tax residence can be triggered and how an unplanned return to the UK can have significant tax consequences if not managed carefully.

When does returning to the UK create a tax risk?

UK tax residence is determined under the SRT, which looks primarily at time spent in the UK alongside an individual’s connections (“ties”) to the UK.

The position is often more complex than the commonly referenced 90-day rule. While spending 183 days or more in the UK in a tax year will automatically result in UK tax residence, many returning expats can become UK‑resident after spending significantly fewer days in the UK, especially if they have retained or acquire ties relevant for the purposes of the SRT — such as:

• a spouse or minor children residing in the UK;
• access to UK accommodation;
• substantive work in the UK (whether employed or self employed);
• UK presence in previous UK tax years; and
• more time in the UK than in any other single country.

The more UK ties an expat has, the fewer days they can spend in the UK before they become UK tax resident. For individuals who are not UK resident in any of the previous three UK tax years, tax residence can be triggered with as few as 46 days in the UK in a tax year, in certain circumstances. For individuals who have ceased to be UK resident in any of the previous  three UK tax years, 17 days in the UK in a tax year can result in UK tax residency,  in certain circumstances.

Why this matters

Becoming UK tax‑resident can have wide‑ranging consequences. Once resident, an individual is generally subject to UK tax on their worldwide income and gains. Any employment or consultancy income earned overseas or income earned for work carried out in the UK for a foreign employer or under a consultancy arrangement with a foreign entity will be subject to tax in the UK – this would also include employment share awards and other incentives in relation to overseas employment. Income received and gains realised from overseas investments also becomes taxable.

Individuals who return to the UK within five tax years of leaving need to be especially careful as they will be caught by the temporary non‑residence rules, which can result in certain income received and capital gains realised during the period of non‑residence being subject to UK tax on their return to the UK.

If an individual is a settlor of any non-UK trusts, say holding non-UK investments, then the income and gains which arise in these trusts can be attributable to such an individual and be subject to UK tax, even if no trust benefits are received from such trusts.

However, it is not all “doom and gloom”. For those British expats who are returning after long periods of absence from the UK (i.e. at least 10 full tax years of non-UK tax residency in the previous 20 tax years) they can benefit from the favourable tax regime that the UK now operates where by their foreign income and gains (subject to certain exceptions) realised during the first four years of UK tax residency will be exempt from UK tax.  This includes distributions received from non-UK trusts in certain circumstances.  In addition, now that domicile is no longer relevant for UK tax purposes if, by the start of the tax year of their return, a British ex-pat (even those born in the UK) has been out of the UK for 10 out of the previous 20 tax years their non-UK assets will remain outside of the scope of the UK inheritance tax until they become UK resident for 10 out of 20 tax years in the future. These tax changes which came into effect from 6 April 2025 can have significant UK tax advantages for some expats who are returning or are considering a return to the UK as under the previous tax regime, they would have been treated as domiciled in the UK from the first year of their return to the UK and so subject to UK tax on a global basis for income, capital gains and inheritance tax purposes, subject to any reliefs available under any applicable double tax treaties.

Exceptional circumstances — limited but relevant

UK tax rules do provide limited relief where days spent in the UK arise due to exceptional circumstances beyond an individual’s control, including war or civil unrest. In these cases, up to 60 days may potentially be disregarded for residence purposes. However, this relief is very limited in practice as, save for situations where an individual is genuinely prevented from leaving the UK due to extreme health or other limited circumstances, they would usually have options available to leave the UK. HMRC has confirmed that it will not make any special allowances under the SRT specifically for returning expats. The exceptional circumstances provisions continue to be interpreted narrowly and applied on a case‑by‑case basis. Remaining in the UK for personal convenience, family reasons, or caution once the immediate crisis has passed, is unlikely to qualify. As a result, exceptional circumstances relief should not be relied upon to assert non-UK tax residency without careful advice.

Planning points for returning expats

For those expats who have returned, or are considering returning to the UK, early planning is essential. Key steps may include:

• reviewing current income streams and asset positions;
• considering likely future income and gains outcomes;
• reviewing days spent in the UK in previous tax years and the current tax year;
• assessing whether split‑year treatment may be available;
• considering whether any employment and incentives tax advice is required;
• assessing the impact of UK residence on existing trust and company structures including any executive roles held; and
• considering whether a temporary stay elsewhere may be appropriate while matters stabilise.

Each individual situation will need to be considered on the facts and will depend on that person’s personal circumstances, family arrangements, and historic UK residence profile.

A shifting policy backdrop for internationally mobile families

Alongside these immediate tax residence considerations, the wider UK tax landscape is also evolving. Rachel Reeves recently launched a consultation aimed at making the UK tax treatment of US‑style Limited Liability Companies (LLCs) more attractive. If implemented, this could simplify cross‑border structuring for US citizens and dual nationals, and may encourage Americans currently based in the Middle East to consider relocation to the UK.

While the outcome of this consultation remains uncertain, it may point to a broader reassessment of how the UK positions itself in a competitive global mobility environment.

A wider reassessment of cross‑border planning

For many internationally mobile families, recent events in the Middle East have highlighted how quickly geopolitical uncertainty can disrupt carefully structured cross-border arrangements. What may have been designed as a long‑term lifestyle move overseas, events can change abruptly, with tax consequences following close behind.

For British expats returning from the Gulf, the key message is to take advice early, ideally before returning to the UK or very shortly thereafter. Even a short, unplanned stay in the UK can have lasting adverse tax implications if UK residence is triggered unintentionally.

For further information, please contact Clare Armitage, Sanjvee Shah or your usual Private Client adviser.

This article is for general information purposes only and does not constitute legal advice or a comprehensive statement of the law. Specific legal advice should always be sought in relation to individual circumstances.

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1. 

   • Clare Armitage

   • Partner
   • Private Client

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2. 

   • Sanjvee Shah

   • Partner
   • Private Client

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