Moving back to the UK from Spain: Your tax checklist

More British residents are leaving Spain after years overseas. Figures from Spain’s National Statistics Institute (INE), highlighted by the UK’s Office for National Statistics, show that more UK-born people aged 65 and over are now leaving Spain than arriving.

Returning also means re-entering the UK tax system, and transactions completed while overseas can still create a UK tax liability after you return.

The rules depend largely on how long you have been away, when you return and what you do with your assets before moving.

When do you become UK tax resident again?

Residence is decided by the Statutory Residence Test, which looks at the days you spend in the UK, your home and your other UK connections. Anyone spending 183 days or more in the UK in a tax year is automatically resident.

The UK tax year runs from 6 April to 5 April, and residence ordinarily applies to the whole year. However, those returning partway through may qualify for split-year treatment, which divides the year into an overseas part and a UK part. For retiree returners, the relevant routes are usually Case 4 (starting to have your only home in the UK) and Case 8 (starting to have a home in the UK).

Spain assesses residence by calendar year and does not generally split the year, so someone who moves partway through may remain Spanish resident for that entire calendar year. Review your departure date under both countries’ rules before the move.

Returning within five years: temporary non-residence
The temporary non-residence rules can apply where someone was solely UK resident for at least four of the seven tax years before leaving and returns within five years. Where they apply, certain income and gains received while living in Spain become taxable in the UK in the year of return. For retirees, three areas are worth reviewing.

Pension withdrawals. Flexi-access drawdown and the taxable element of uncrystallised funds pension lump sums paid without UK tax while you were abroad can be brought back into charge. Where these withdrawals exceed £100,000 in total, the full amount can become taxable in the year of return. For example, £120,000 drawn in Spain with no UK tax under the double taxation agreement could be taxed in full on a return within five years. The State Pension and defined benefit pensions are not caught.

UK property sales. Non-residents selling UK residential property only pay capital gains tax on gains since April 2015. On an early return, the earlier part of the gain may also become taxable, although Private Residence Relief may reduce it where the property was your main home.

Shares and investments. Gains on shares and funds held before leaving the UK and sold while abroad can also be caught. Assets bought after becoming non-resident are generally excluded.

Someone who left in June 2022 and sold shares in 2024 would be caught by a return in May 2027, but not by one in July 2027. HMRC explains the capital gains rules in its temporary non-residence helpsheet (HS278

Returning after ten years: the FIG regime

For those who have been non-UK resident for at least ten consecutive tax years, the position can be far more favourable. Since 6 April 2025, the four-year Foreign Income and Gains (FIG) regime lets qualifying new residents claim UK tax relief on foreign income and gains for their first four tax years.

British nationals qualify on the same basis as anyone else. Qualifying income could include rent from a Spanish property, interest on Spanish bank accounts and gains on Spanish assets.

The relief must be claimed through self-assessment each year, and there is a trade-off. A claim costs your personal allowance (£12,570 @ 0%) and your capital gains annual exempt amount (£3,000 exempt) for that year. HMRC sets out the conditions in its FIG regime guidance (HS266).

After you return

A self-assessment return is needed if you have foreign income or gains.

If you are not already registered, the deadline is 5 October after the end of the tax year. For a return to the UK during 2026/27, that means registering by 5 October 2027 and filing by 31 January 2028.

If your UK pension has been paid under an NT code, tell HMRC and your provider so that UK tax is deducted correctly. If you let UK property under the non-resident landlord scheme, tell your letting agent and HMRC, as the scheme is based on where you usually live.

Your checklist before leaving Spain

1. Confirm how many tax years you have been non-resident.
2. Choose your arrival date with split-year treatment and Spanish residence in mind.
3. Check any pension withdrawals, UK property sales or share sales made while abroad.
4. If you are eligible for FIG, compare the relief with the allowances you would lose.
5. Register for self-assessment and update your pension tax code.

Reviewing the position with a UK expat tax advisor before the move is usually far simpler than resolving it afterwards. Global Tax Consulting’s moving to the UK tax guide and moving to the UK tax calculator are a useful starting point.

Emma McDermott ATT is the founder of Global Tax Consulting, a UK tax advisory firm specialising in expatriates, non-residents and internationally mobile individuals. She previously worked at Deloitte and has been a member of the Association of Taxation Technicians since 2020.

This article is for informational purposes only and does not constitute tax or financial advice. Tax rules are complex and depend on individual circumstances. Always seek advice from a qualified tax professional before making decisions about your return to the UK.