Become UK tax resident and the UK taxes your worldwide income. But new arrivals get something Portugal and Spain don't offer: four tax years with no UK tax on foreign income and gains. Here's how it works in 2026/27 — and what Americans and Canadians keep owing back home.
Figures verified 3 July 2026The Statutory Residence Test decides. Spend 183 or more days in the UK in a tax year and you're automatically resident. Fewer than 16 days and you're automatically not (46 if you were non-resident for the prior three years). In between, a "sufficient ties" test counts your connections — home, family, work — against your day count (HMRC RDR3). Most people who move here full-time are resident from arrival. Plan on it.
These are the rates for England, Wales and Northern Ireland (HMRC):
| Taxable income (above allowance) | Band | Rate |
|---|---|---|
| Up to £12,570 | Personal allowance | 0% |
| £12,571 – £50,270 | Basic | 20% |
| £50,271 – £125,140 | Higher | 40% |
| Above £125,140 | Additional | 45% |
The personal allowance is frozen at £12,570 until April 2031 (Autumn Budget 2025), and tapers away £1 for every £2 of income over £100,000 — it's gone entirely at £125,140.
This is the UK's big draw for new arrivals. Since 6 April 2025 (it replaced the old "non-dom" rules), anyone who has been non-UK-resident for 10 consecutive years can elect, for their first four tax years of residence, to pay no UK tax on foreign income and gains — pensions, dividends, interest, capital gains arising outside the UK (HMRC). Nearly every genuinely new arrival from the US or Canada passes the 10-year test.
The mechanics: you claim year by year through Self Assessment, and the claim deadline is 31 January in the second year after the tax year ends — a 2026/27 claim is due by 31 January 2029 (HMRC HS266). Claiming costs you that year's personal allowance and capital gains exempt amount — usually a trivial price against four years of sheltered foreign income. UK-source income (a UK salary, UK rent) is taxed normally throughout.
The US–UK tax treaty (2001) does the heavy lifting here — and it's mostly good news:
Under the Canada–UK treaty, CPP, OAS and pensions paid to a UK resident are taxable only in the UK (Article 17); annuities can carry up to 10% Canadian tax (HMRC DT4610). Lump-sum RRSP/RRIF withdrawals may not get treaty relief — same specialist-advice flag as the US side.
The US taxes citizens on worldwide income wherever they live. The Foreign Earned Income Exclusion is $132,900 for 2026 (IRS) — but it covers earned income only, so retirees rely on foreign tax credits instead. FBAR filing kicks in once foreign accounts exceed $10,000 aggregate; FATCA Form 8938 at $200,000 (single, living abroad; $300,000 year-end peak; both doubled for joint filers) (IRS).
| Income type | Allowance (2026/27) | Rate |
|---|---|---|
| Capital gains | £3,000 exempt amount | 18% basic-rate / 24% higher-rate (HMRC) |
| Dividends | £500 allowance | 10.75% / 35.75% / 39.35% — basic and higher rates rose 2 points on 6 April 2026 (HMRC) |
| Savings interest | £1,000 basic / £500 higher / nil additional | Income tax rates; savings and property rates rise 2 points from April 2027 (announced, pending) |
| ISA | £20,000/yr | Tax-free in the UK. From 6 April 2027 the cash-ISA portion is capped at £12,000 for under-65s — 65+ keep the full £20,000 (HM Treasury) |
Since 6 April 2025 IHT is residence-based. Once you've been UK resident for 10 of the last 20 tax years you're a "long-term resident" and your worldwide estate is in scope. Before that, only UK assets are. The rate is 40% above the nil-rate band of £325,000 plus the £175,000 residence band — roughly $660,000 combined, both frozen to April 2031 (HMRC). Leave the UK later and an "IHT tail" follows you for 3–10 years.
The new State Pension is £241.30/week in 2026/27 (~$319) after the 4.8% triple-lock rise. You need 10 qualifying years of National Insurance for anything, 35 for the full amount; voluntary Class 3 contributions cost £18.40/week (GOV.UK). If you'll work in the UK, even a partial record is real money later.
Americans: a US–UK totalization agreement exists — credits from both countries can be combined to qualify for benefits (SSA).
Social Security, IRAs, 401(k)s, Roths, and the lump-sum problem — what's settled and what's contested.
Who qualifies, what a claim costs you, and how to use four tax-free years deliberately.
The 10-of-20-years rule, the frozen bands, and the planning moves that only work early.
FTC vs FEIE, FBAR, FATCA, and the PFIC rules that shape what you can invest in.