UK Tax Residency Rules for Expats in 2025

For expats living in or moving to the UK, understanding your tax residency status is essential – especially in 2025, as the UK tax environment continues to evolve. With financial transparency increasing and digital nomadism on the rise, HMRC is placing greater scrutiny on global income, residence ties, and cross-border taxation.

Xerxes Associates LLP, a leading advisory firm for international professionals and US expats in the UK, breaks down what’s new, what’s stayed the same, and how to stay compliant while protecting your wealth.

The Basics: What Is Tax Residency?

Tax residency determines whether you are liable to pay UK tax on your worldwide income or only on UK-sourced income. It’s assessed primarily using the Statutory Residence Test (SRT) – a three-part test introduced in 2013 that considers:

• Time spent in the UK 
• Ties to the UK (e.g. family, accommodation, work) 
• Previous residency history 

Failing to get this right could result in being taxed in multiple jurisdictions or facing penalties for non-disclosure.

What’s New in 2025?

While the core SRT rules remain unchanged, two key developments are impacting expats in 2025:

1. Increased Data Sharing Across Borders

Following the OECD’s Common Reporting Standard (CRS) expansion and UK government investment in digital compliance tools, HMRC is now receiving more data from foreign banks and tax authorities than ever before. This means passive income (dividends, interest, rental) earned abroad is more likely to be reported and taxed – even if you didn’t think you were UK resident.

2. Post-Brexit Visa Impacts

Certain residency statuses granted pre-Brexit no longer carry tax exemptions, and some EU citizens are finding themselves classified as UK tax residents unintentionally, particularly if they maintain a home in the UK or split time across multiple countries.

Common Mistakes Expats Make

• Believing fewer than 183 days in the UK automatically means non-residency (this is not always true) 
• Assuming a foreign employment contract exempts you from UK tax 
• Forgetting that UK residency can be triggered by family ties or having a home in the UK – even if unused 
• Not filing a Self Assessment return despite having foreign income 

How Xerxes Associates LLP Helps You Navigate Tax Residency

At Xerxes Associates LLP, we provide strategic advice tailored to:

• US Expats living in the UK 
• UK citizens returning from overseas 
• Digital nomads and globally mobile professionals 

Our services include:

• Tax residency status reviews 
• Double taxation mitigation 
• Filing assistance for both UK and US returns 
• Residency planning for high-net-worth individuals 

We take into account your global lifestyle, asset structure, and personal goals to help you optimise your tax position while remaining fully compliant with UK law.

Why Proactive Planning Matters

The cost of reactive tax advice or misclassification can be significant – especially with HMRC’s crackdown on offshore income. Working with a cross-border specialist ensures you remain protected and avoid costly surprises.

Book a confidential consultation with our team today

Get in Touch

For those seeking guidance on cryptocurrency taxation or other expatriate tax matters, Xerxes Associates LLP offers consultations to discuss individual needs and circumstances. To learn more about their services or to schedule a consultation, visit their contact page.[/vc_column_text][/vc_column][/vc_row]