The UK lets you leave without an exit tax. It does not let go of everything.
Leaving is not treated as a sale of your shares. But if you come back within five years, gains made in between can follow you home, and inheritance tax keeps its hold for years after you go.
No exit tax, and what that means
Let us say it plainly: the UK has no exit tax for individuals. Some countries, Germany among them, treat the end of residence as if you had sold your shares on the day before you left. The UK does not. Under section 1A of the Taxation of Chargeable Gains Act 1992, capital gains tax falls on UK residents on their gains wherever the assets are, and on non-residents only on UK land, on assets that derive at least 75 per cent of their value from UK land, and on assets of a UK branch. GOV.UK puts it in one line: if you live abroad, you do not normally pay tax when you sell an asset, apart from UK property or land.
That is real good news: a family with a business or a share portfolio leaves without a tax bill on the day of departure, no valuation, no instalments, no security. The UK holds on in other ways, and that is where the planning lies: the residence test decides when you have left, the five-year rule what happens if you come back, inheritance tax runs on for years, and a UK company has a point of its own.
When you stop being resident: the residence test and the split year
Whether you are UK resident in a tax year is decided by the statutory residence test, in HMRC’s guidance RDR3. For someone who has just left, the simplest route out is the first automatic overseas test: fewer than 16 days in the UK in the tax year. Above that, your ties to the UK decide, a place to live among them; how a house you keep counts is on the page Two homes.
Residence applies to a whole tax year, from 6 April to 5 April. In the year of the move it can be split into a UK part and an overseas part. The case that fits a family giving up its UK house is Case 3 of the split-year rules: you were UK resident in the previous year, you cease to have any home in the UK and have none for the rest of the year, you spend fewer than 16 days in the UK after that, you are not UK resident in the following year, and within six months you have a sufficient link with the new country, for instance by being resident there for tax. Ireland counts, and so does having your only home there.
The five-year rule: temporary non-residence
Here is the provision that takes the place of an exit tax, and it works the other way round: it does not charge you for leaving, it charges you for coming back too soon.
You are temporarily non-resident if you had sole UK residence in at least 4 of the 7 tax years before the year you left, and your period away lasts 5 years or less. More than five years means five years and one day. A year in which a treaty made you resident in another country counts as a year away, not as a year of sole UK residence.
If the rule applies, gains on assets you already held when you left and sold while abroad are treated, under section 1M of the Taxation of Chargeable Gains Act 1992, as made in the year you return. Assets bought while you were abroad are, as a rule, outside it (section 1N). Certain income goes the same way, according to HMRC, distributions from closely controlled companies and certain pension lump sums among them. And the convention with Ireland is no shield: section 1M(4) says that nothing in any double taxation arrangement prevents the charge.
| Point | Value |
|---|---|
| Who | sole UK residence in at least 4 of the 7 tax years before departure |
| How long away | 5 years or less |
| Gains | on assets held before leaving and sold while away: taxed in the year of return |
| Income | among others, distributions from closely controlled companies, certain pension payments and lump sums |
| Convention | does not prevent the charge |
Source: HMRC, “RDR3: Statutory Residence Test (SRT) notes”, section 7 (updated 11 June 2026); Taxation of Chargeable Gains Act 1992, sections 1A, 1M and 1N, legislation.gov.uk. As of: read 6 November 2026.
For a family that moves to Ireland to stay, this is not a planning figure. For a family considering a stay abroad for a few years, it is the central question, and it should be asked before leaving, not in year four.
The inheritance tax tail
Since 6 April 2025 UK inheritance tax on assets outside the UK no longer depends on domicile but on long-term residence: according to HMRC’s manual IHTM47020, you are a long-term UK resident if you were UK resident in at least 10 of the 20 tax years before the year of the event. And that status does not end on the day you leave. It runs on for at least three tax years, and longer the longer you lived in the UK:
| Years of UK residence out of the last 20 | Tax years still in scope |
|---|---|
| 13 or less | 3 |
| 14 | 4 |
| 15 | 5 |
| 16 | 6 |
| 17 | 7 |
| 18 | 8 |
| 19 | 9 |
| 20 | 10 |
The years in scope are counted as consecutive years of non-residence. A year with split-year treatment counts as a full year of UK residence.
Source: HMRC Inheritance Tax Manual IHTM47020 “Long-term UK residence test”, GOV.UK. As of: read 6 November 2026.
Ireland, for its part, brings worldwide assets of a non-dom into its capital acquisitions tax at 33 per cent only from the sixth year of residence, as the page on Irish inheritance tax explains. Where both countries reach the same estate, a separate UK-Ireland convention on estates, inheritances and gifts decides which country gives way and credits the other’s tax. What that means for a family is on the page Inheritance and gifts.
If you own a UK company
Your shares do not trigger a charge when you leave. Your company can, at its own level. A company incorporated in the UK stays UK resident under UK law, under section 14 of the Corporation Tax Act 2009, even if you run it from Ireland. But Ireland treats a foreign company managed and controlled in Ireland as Irish resident, and then the two tax authorities decide under the convention, by mutual agreement. If the result is that the company is Irish, it becomes non-UK resident, and under section 185 of the Taxation of Chargeable Gains Act 1992 it is deemed to have sold all its assets at market value on the day it ceases to be UK resident, except assets kept in use for a UK permanent establishment.
For an owner-manager the question is therefore also where the company will be run from; the mechanics, from both sides, are on the page Irish Limited while UK resident.
What to do before you leave
This page describes the law, not a structure. What follows for you depends on your assets, your history and your timetable, and that belongs in a consultation, not on a website.
Three points should still be settled early, because they shape the timing of the move. First, the return horizon: whether you might come back within five years decides whether the five-year rule is a footnote or the core of the plan, and it should be decided before any sale. Second, the home: whether you keep a UK home decides whether the split year is open to you. Third, how the UK side fits the Irish one, above all the order of your accounts and the year of arrival. HMRC wants to be told: with form P85 if you do not file Self Assessment, otherwise with the residence pages SA109 of your return. The Irish side after that, registering with Revenue and the first return, we take on as the tax registration as a non-dom.
Whoever discovers the five-year rule only after selling has made no mistake, but has lost every choice.
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