Gulf expats worried about tax bill after UK return
Newsletter issue – April 2026
British citizens living in Gulf states have been returning to the UK because of the conflict involving Donald Trump's war with Iran. Many left suddenly for safety reasons, not intending to change their tax residency status.
Returning earlier than planned can trigger the UK's five-year temporary non-residency rule, an anti-avoidance measure. If someone becomes UK-resident again within five full tax years, capital gains made abroad may become taxable in the UK. This is catching out people who sold assets while abroad assuming they were outside the UK's tax scope.
Tax advisers say families are 'troubled' by the unexpected liabilities. Many did not consider residency day-count rules during an emergency evacuation. HMRC has updated guidance to allow war as an 'exceptional circumstance,' but accountants argue the rules remain narrow and restrictive.
Experts urge HMRC to take a more pragmatic and sympathetic approach given the extraordinary situation. Staying in the UK after the initial crisis often does not qualify as an exceptional circumstance under current rules.
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