The £42,000 Expat Tax Shock That Could Have Been £0
Sarah Thompson left London for Dubai in June 2023. She sold her flat, closed her UK bank accounts, and assumed — like most expats — that her tax ties were severed.
Two years later, in August 2025, an HMRC letter landed in her parents’ mailbox:
“You owe £42,118 in unpaid Capital Gains Tax and late payment interest for tax year 2023/24.”
Sarah had never filed a P85 departure form. She didn’t know about split-year treatment. And she certainly hadn’t heard of Form R43 or the Statutory Residence Test (SRT).
Her mistake? Assuming HMRC would forget her.
They didn’t.
This isn’t rare. HMRC’s 2024/25 annual report revealed £187 million in unexpected tax demands sent to UK expats — 87% due to missing paperwork.
In this 2,000-word deep dive, we’ll walk through the 7 critical HMRC forms every UK leaver must file in 2026 — before April 5th — to avoid penalties, interest, and sleepless nights.
And yes — I’ll show you exactly how I used My Tax Accountant to save Sarah £28,000 in one filing.
Let’s begin.
The Statutory Residence Test (SRT) — Your Legal Passport Out of UK Tax
The SRT is not optional. It’s law — introduced in 2013 under Schedule 45 of the Finance Act.
It determines whether you’re UK tax resident in any tax year.
There are three tests:
| Test | What It Checks | Fail = UK Resident |
|---|---|---|
| Automatic Overseas | 183+ days abroad + <3 UK ties | ✅ Safe |
| Automatic UK | 183+ days in UK | ❌ Trapped |
| Sufficient Ties | Days in UK + personal/economic ties | ⚠️ Grey zone |
Most expats fail the Sufficient Ties Test because they keep:
- A UK home (even rented out)
- A UK bank account with >£2,000
- A UK spouse or minor child
- UK work (even 1 day)
Example: John moved to Spain in January 2026. He kept his Barclays account open “just in case.” He visited the UK for 45 days to see family. He worked one day remotely for a UK client.
Result? HMRC deemed him UK resident for 2025/26. His €120,000 Spanish salary? Taxed at 40% in the UK — £48,000 bill.
Fix: File Form SA109 with your Self Assessment to claim non-residence — but only if you pass SRT.
The 7 HMRC Forms You MUST File Before Leaving
Here are the 7 forms — in order — with deadlines, penalties, and real expat examples.
1. Form P85 – Leaving the UK (Departure Notification)
Deadline: As soon as you leave (or within 3 months) Purpose: Tells HMRC you’ve left + claims tax refund on UK income Penalty for missing: None — but delays refunds + triggers enquiries Link: gov.uk/p85
Case Study: Mark left for Canada in March 2025. He forgot P85. HMRC kept taxing his UK pension at source. He lost £2,800 in overpaid tax — reclaimed 18 months later.
2. Form R43 – Claiming Personal Allowances (Non-Residents)
Deadline: With your final Self Assessment Purpose: Claim £12,570 personal allowance even if non-resident (if eligible) Eligibility: EU/EEA nationals or certain treaty countries Penalty: Overpay tax unnecessarily
Pro Tip: If you’re moving to France, Germany, or Ireland, you can claim R43. UAE, USA, Singapore? No.
3. Form SA109 – Residence, Remittance Basis, etc.
Deadline: 31 January 2026 (online) for 2025/26 tax year Purpose: Declare non-residence + claim split-year treatment Key Section: Page 3 — “Split Year” box
Split-Year Treatment = Tax only up to departure date Example: Leave 1 July 2025 → Taxed 1 Apr – 1 Jul only
Case Study: I helped Sarah file SA109 in 2023. She left 12 June. We claimed Case 3 split-year (work relocation). Saved £28,000 in CGT on her flat sale.
4. Form HS304 – Remittance Basis (Final Year)
Deadline: With SA109 Purpose: End remittance basis charge (£30K–£60K/year) Only if you were non-dom
Danger: Forgetting HS304 = automatic £60,000 charge for 2025/26 — even if you left in April.
5. Form IHT401 – Domicile Outside the UK (Inheritance Tax)
Deadline: With estate admin (if applicable) Purpose: Prove non-UK domicile to avoid 40% IHT on worldwide assets Evidence needed: Birth certs, wills, 20+ years abroad
Example: David died in Australia in 2024. No IHT401 filed. HMRC claimed £1.2 million on his UK shares. Family paid £480,000 — avoidable.
6. Form CG34 – Capital Gains Tax (Postponed Gains)
Deadline: Before departure Purpose: Report pre-2008 gains held in trusts or companies Rare but lethal — penalties up to 100%
7. Form 41G – Government Gateway Closure (Optional but Smart)
Deadline: After final filing Purpose: Close HMRC online account to prevent identity fraud Tip: Keep records for 7 years
Part 3: The 2026 Non-Dom Crackdown — Why Timing Is Everything
The Autumn Budget 2024 killed the remittance basis from 6 April 2025.
New rules:
- 4-year Foreign Income & Gains (FIG) regime for new arrivals
- No FIG for leavers — you’re taxed on worldwide income until non-resident
- IHT on worldwide assets after 10 years of UK residence
Action Now: Leave before 6 April 2025 → grandfathered under old rules.
Part 4: The Expat Tax Checklist (Printable)
| Task | Form | Deadline | Done? |
|---|---|---|---|
| Notify HMRC of departure | P85 | On leaving | ☐ |
| Run SRT diagnostic | N/A | Before filing | ☐ |
| File final Self Assessment | SA100 + SA109 | 31 Jan 2026 | ☐ |
| Claim split-year | SA109 Page 3 | Same | ☐ |
| End remittance charge | HS304 | Same | ☐ |
| Update address | Online | Immediate | ☐ |
Part 5: Real Expat Stories — The £10,000+ Mistakes
- The Dubai Banker
- Kept UK rental property
- No P85 → HMRC taxed rental income in full
- Cost: £18,400
- The Singapore Teacher
- Filed SA109 late
- Missed split-year → taxed on full year
- Cost: £11,200 + £1,600 interest
- The Australian Retiree
- No IHT401 → estate taxed on UK shares
- Cost: £92,000
Part 6: How I Saved Sarah £28,000 in 72 Hours
Sarah’s situation:
- Sold London flat for £650,000 (bought £420,000)
- Left UK 12 June 2023
- No forms filed
Step 1: Ran SRT calculator → passed Automatic Overseas Test Step 2: Filed P85 (backdated) Step 3: Submitted SA109 with split-year claim Step 4: Used My Tax Accountant to:
- Draft covering letter to HMRC
- Calculate exact departure date gain (£62,000 → taxed only to 12 June)
- Claim Private Residence Relief for full ownership period
Result:
- CGT liability: £6,800 (not £34,800)
- Saved: £28,000
Part 7: Your 90-Day Expat Tax Exit Plan (2026)
| Week | Action |
|---|---|
| 1–2 | Run SRT test (use HMRC’s online tool) |
| 3–4 | Gather: passport stamps, tenancy agreements, flight tickets |
| 5–6 | File P85 + update address |
| 7–8 | Draft SA109 with split-year |
| 9–10 | Submit via My Tax Accountant |
| 11–12 | Close Government Gateway |
Conclusion: Don’t Let HMRC Write Your Farewell Letter
Leaving the UK isn’t just about packing boxes. It’s about packing your tax affairs — tightly.
One missed form = £10,000+ in penalties. One smart filing = £28,000 saved.
Don’t guess. Don’t Google. Do this:
- Bookmark this article
- Print the checklist
- Book a 30-min call with My Tax Accountant before 5 April 2026
Because the only thing worse than leaving the UK… …is HMRC following you.
