How does the UK Autumn Budget 2024 affect people planning to leave the UK?

Following the UK Autumn Budget announcement in October 2024, UK citizens who are planning to move abroad primarily asked us questions about the implications for rental income from UK properties, mortgage rates, capital gains tax, selling UK properties and moving money out of the UK.

In our recent webinar, we put questions from expats living in the UK to our panel of tax, financial management and currency experts to find out the most important things you need to know if you’re planning to leave the UK and live abroad.

Moving money to and from the UK when you move abroad

There has been limited impact on major currencies post-budget, but as always, expats will want to take steps to minimise the risk of FX volatility if they are moving large sums of money abroad, such as funds from the sale of a UK property.

It’s important that you take steps to mitigate FX risk before you move abroad. For example, we’ve seen a 14% variance in the value of USD year to date. And, with Trump coming in as President, the dollar is forecast to significantly strengthen. This means if you are selling a property in the UK and looking to move to the US, the amount you’ll receive from that property sale in future could look very different to what you would receive today.

Therefore, you will want to ensure you have the right tools in place to mitigate risk from a currency perspective. Alternatively, if you decided to keep the property in the UK after moving to the US and move funds over to cover your mortgage or receive income from rent, you’ll want to ensure you have the right FX processes in place.

Renting out UK property when you move abroad

While there were no changes announced in the budget which directly impact rental income received from the UK, if you are moving abroad and renting out a property for the first time, there is quite a lot to consider.

The first thing to do is speak to your mortgage lender and ensure you have consent to let the property out. You will likely find that you have a residential mortgage with the appropriate residential interest rate applied, and it will usually be part of your terms and conditions that the property is not rented out.

If you want to rent your property, this may change how the lender considers your mortgage. They may want to renegotiate your mortgage deal, switch you to a buy-to-let mortgage and apply a higher interest rate. In some cases, they may allow a fixed mortgage period to come to an end before they renegotiate.

It’s also important to remember that if you have a mortgage on your residential property, this has been calculated based on your income. When it becomes a buy-to-let property, your mortgage lender will usually want to recalculate based on the rental income that’s being received.

Additionally, if you are moving abroad, contents insurance will normally be dependent on the fact that you will not be absent from your property for more than 30 days. You will therefore need to have landlord insurance in place, which will cover your property and contents when you rent it out.

From a tax perspective, if you are living abroad and renting out a property, you will need to register under the Non-resident Landlords Scheme (NRLS) with HMRC. If you do not have this in place and you are using a managing agent to rent the property out, they will be required to pay a percentage of your rental income directly to HMRC. The NRLS allows you to receive your rental income gross and then complete a self-assessment return to HMRC at the end of the tax year and pay the appropriate tax.

If you’re a UK citizen, you may not have any tax to pay because you will have your single personal allowance which you can offset against any tax due.  Many UK expats are not using their personal allowance because they’ve moved abroad and are working and receiving income under a different tax regime.

Additionally, you will also need to consider how any rental income impacts on your circumstances in whichever jurisdiction you’ve moved to. If you are receiving rental income, this is classed as foreign income that’s being relieved under the UK tax provision of a single personal allowance. Suddenly then, you have a chunk of income which potentially falls into the tax regime of whatever country you are moving to. For example, if you move to Spain, you must declare that income and the fact that you have an asset in the UK.

Tax implications for people moving abroad

Inheritance tax (IHT)

If you are leaving the UK, you will need to understand whether or not you remain within the UK inheritance tax regime. Under the changes announced in the budget, after 5^th April 2025, if you have been a UK resident for 10 years out of a 20-year window, you are now subject to UK inheritance tax.

If you are leaving the UK before the 5^th April 2025 and you are deemed as domiciled in the UK, you might have an IHT tail for at least three years after leaving.

Capital gains tax (CGT) and UK property

If you sell a UK property after you are non-resident in the UK, then your capital gain will be subject to the non-resident capital gains tax regime.

This has special methods for calculating your potential gain for UK tax purposes, and you can choose the one which produces the lowest amount of UK capital gains tax for you:

1. The original calculation
2. A default calculation which enables you to rebase the value of your property to April 2015
3. The gain you made on the property on a straight line basis, and how that straddles the April 2015 dates

The main residence exemption may also apply if you are non-resident. For example, if the property was your main home and you only left the UK a short while ago, it may be exempt from CGT.

Temporary non-residence rules

If you only leave the UK for the short-term and return within five years, any UK-sourced income and gains you have realised during that period might come back into UK tax charge.

Money held in ISAs

While ISAs are tax-free in the UK, they are not tax-free elsewhere. This means you will need to report gains and declare income wherever you are in the world.

Residency planning

When moving abroad, all UK taxpayers will need to think carefully about their residency planning, including:

• When are you going to become non-resident in the UK for tax purposes?
• Will you initially be dependent on a split year for tax purposes and how do you ensure this is applied?
• Will you continue to earn UK-sourced income (including income from real estate)? If so, will it be taxable where you are resident?

All of these questions are best explored with the support of a specialist tax advisor.