UK Autumn Budget 2026: What it means for British expatriates and internationally mobile clients

The UK Autumn Budget was delivered on 28 October 2026. While many of the headline announcements relate primarily to people living and working in the UK, there are several important developments for British expatriates, internationally mobile individuals and those retaining UK pensions, property, investments or other financial connections.

For internationally mobile clients, the most significant issues concern pensions and inheritance tax, UK property and savings income, pension death benefits, and planning around a future return to the UK.

This briefing focuses on the areas we believe are most relevant to internationally mobile clients.

Key points at a glance

Most unused pension funds and pension death benefits are due to fall within the UK inheritance tax regime from 6 April 2027.
Inheritance tax thresholds remain frozen until April 2031.
A restrictive two-year rule affecting the taxation of certain pension death benefits has been removed from 28 October 2026.
No new Budget restriction was announced specifically targeting QROPS or overseas pension transfers.
UK property and savings income tax rates increase to 24%, 44% and 49% from April 2027.
The main rates of capital gains tax remain unchanged at 18% and 24%.
Business Asset Disposal Relief is being restricted, while a new Founders’ Relief is being introduced.
The four-year Foreign Income and Gains regime remains important for qualifying individuals moving or returning to the UK.
The full new State Pension increases by 3.9% from April 2027.
Clients contemplating a return to the UK should consider their position before becoming UK resident, rather than waiting until after the move.

1. Pensions and UK inheritance tax

One of the most important changes affecting UK-connected families is not a new Budget announcement, but a major reform that will take effect shortly.

From 6 April 2027, most unused pension funds and pension death benefits will be included when calculating the value of an individual’s estate for UK inheritance tax (IHT).

Historically, pensions have often played an important role in estate planning because discretionary pension benefits could generally sit outside the member’s estate for IHT purposes. This has sometimes encouraged individuals to preserve pension wealth while spending other assets during retirement.

That planning assumption is changing. For deaths from 6 April 2027, most unused pension funds and death benefits will potentially contribute to the value of the estate for IHT purposes. The standard IHT rate remains 40% above the available exemptions and allowances.

The Budget includes further technical provisions concerning how the new regime will operate, including mechanisms for IHT attributable to pension benefits to be paid directly from pension funds in certain circumstances.

Inheritance tax thresholds remain frozen

The inheritance tax nil-rate band remains £325,000 and the residence nil-rate band remains £175,000. The residence nil-rate band continues to taper for estates above £2 million. These thresholds are frozen until the end of the 2030/31 tax year.

The combination of frozen allowances and the inclusion of most unused pension benefits within estates from April 2027 makes estate planning increasingly important for clients who remain exposed to UK inheritance tax.

Why this matters particularly to expatriates

Since April 2025, UK inheritance tax exposure has increasingly been determined by long-term UK residence rather than the former domicile-based system.

For a long-term UK resident, the new pension IHT rules can extend to relevant pension property in registered UK pension schemes and certain qualifying overseas pension schemes, regardless of where the pension scheme itself is situated.

Simply holding pension assets outside the UK does not therefore necessarily remove them from UK inheritance tax. Conversely, the position for someone who is not a long-term UK resident can be different and requires consideration of the individual’s residence history, the type and location of the pension arrangement and the wider estate.

Planning point

Clients with significant pension wealth should review their estate and retirement planning before April 2027 rather than automatically assuming that retaining the maximum possible amount inside a pension remains the most tax-efficient estate-planning strategy.

This does not mean pensions should simply be withdrawn. Pension withdrawals can themselves have significant tax consequences, and the appropriate strategy will depend upon residence, age, beneficiaries, other assets and future plans.

2. A welcome change to pension death benefits

For payments made on or after 28 October 2026, pension and lump-sum death benefits that would otherwise qualify for tax-free treatment will no longer become taxable solely because they are paid more than two years after the member’s death.

Previously, administrative delays could result in an otherwise tax-free benefit becoming taxable simply because the two-year deadline had been exceeded. The change is particularly helpful for international families, where estates can take longer to administer because beneficiaries, executors and pension arrangements may be located in several jurisdictions.

The Budget also changes how tax is assessed where the deceased member’s lump-sum death-benefit allowance has been exceeded. The excess will no longer simply be treated as pension income of individual beneficiaries. Instead, the tax charge will be determined by reference to each beneficiary’s share of the excess and their marginal income tax rate.

3. QROPS and overseas pension transfers

There was no new Budget restriction specifically targeting Qualifying Recognised Overseas Pension Schemes (QROPS) or overseas pension transfers.

This should not be interpreted as meaning that overseas pension transfers are unrestricted. Existing rules governing QROPS, the Overseas Transfer Allowance, Overseas Transfer Charge and taxation of benefits remain relevant.

The Budget does not, by itself, create a reason either to accelerate or delay a proposed overseas pension transfer. Clients considering transferring UK pension benefits overseas should continue to assess the merits of a transfer based upon their country of residence, likely future residence, pension benefits and guarantees, tax position, currency requirements and estate-planning objectives.

4. UK State Pension

The full new UK State Pension will increase by 3.9% from April 2027 to £250.70 per week, equivalent to £13,036.40 per year.

A temporary pension tax allowance will also be introduced for the three tax years from 2027/28 to 2029/30. It is designed primarily to prevent individuals whose income is broadly limited to the State Pension from becoming liable to income tax simply because the State Pension is approaching the level of the frozen personal allowance.

For expatriates with other pension, investment, rental or employment income, the wider tax position will depend upon their residence and individual circumstances.

5. Higher taxation of UK rental property

This is likely to be one of the most immediately relevant Budget changes for British expatriates who have retained UK property.

From the 2027/28 tax year, the income tax rates applying to property income in England, Wales and Northern Ireland will increase to 24% at the basic property rate, 44% at the higher property rate and 49% at the additional property rate.

For expatriate landlords already facing management costs, maintenance, financing costs and UK tax, this further reduces the net return generated by personally owned UK investment property. Non-UK residence does not automatically exempt an individual from UK tax on UK rental income.

Planning point

Clients who retain UK investment property should assess it on the same basis as any other investment: the net return after tax, financing, maintenance and management costs, together with the concentration and liquidity risks involved. The fact that a property has performed well historically does not necessarily mean retaining it remains the most appropriate investment strategy.

6. Higher tax rates on savings income

Tax rates applying to savings income will also increase from April 2027 to 24% at the basic savings rate, 44% at the higher savings rate and 49% at the additional savings rate.

The Personal Savings Allowance remains £1,000 for basic-rate taxpayers and £500 for higher-rate taxpayers, with no allowance for additional-rate taxpayers. This may be particularly relevant to individuals returning to the UK with substantial amounts held in bank deposits or other interest-bearing investments.

The wider income-tax thresholds also remain frozen. For 2027/28, the personal allowance remains £12,570, the higher-rate threshold £50,270 and the additional-rate threshold £125,140, with the freeze continuing until the end of 2030/31.

7. Offshore bonds and life assurance investments

The Budget did not introduce a wholesale new tax regime for offshore investment bonds.

For internationally mobile investors, the important point remains that the eventual tax treatment of an offshore bond can depend heavily upon residence at the time benefits are taken.

Offshore bonds can therefore continue to provide valuable tax-deferral and investment-planning opportunities in appropriate circumstances, but withdrawals should be planned carefully, particularly when an individual is considering returning to the UK. Time-apportionment relief, top-slicing relief and the individual’s residence history can all be relevant depending upon the circumstances.

The Budget also contains a technical clarification concerning investment life insurance contracts held by companies. The existing corporation-tax exemption for companies receiving payouts will apply only where the contract is held otherwise than for the purposes of a trade carried on by the company. For most individual clients, this technical corporate change will have little direct relevance.

8. Returning to the UK and the Foreign Income and Gains regime

The Budget did not introduce a new overhaul of the UK’s Foreign Income and Gains (FIG) regime. The regime introduced in April 2025 therefore remains an important planning consideration for internationally mobile individuals returning or relocating to the UK.

Broadly, an individual becoming UK tax resident after at least 10 consecutive tax years of non-UK residence may be eligible for the four-year FIG regime. For qualifying individuals, this can provide a valuable period in which eligible foreign income and gains can receive favourable UK tax treatment.

Planning point

Anyone contemplating a return to the UK should ideally take advice before becoming UK resident. The timing of investment disposals, pension benefits, offshore bond withdrawals, business sales and the restructuring of investment portfolios can make a substantial difference to the eventual UK tax position. Planning after UK residence has already commenced can significantly reduce the options available.

9. Capital gains tax and business owners

The main rates of UK capital gains tax remain unchanged for 2027/28 at 18% and 24%. The annual CGT exempt amount also remains £3,000 for individuals and personal representatives.

Business Asset Disposal Relief

From 6 April 2027, the lifetime amount of gains qualifying for Business Asset Disposal Relief will fall from £1 million to £500,000.

New Founders’ Relief

A new Founders’ Relief will be introduced from 6 April 2027, providing a 10% CGT rate on up to £10 million of lifetime qualifying gains for eligible founders of high-growth, innovative companies.

Employee share schemes

For some internationally mobile executives, changes to the Company Share Option Plan may also be relevant. From April 2027, the individual CSOP option limit will increase from £60,000 to £120,000 and the maximum exercise period will increase from 10 to 15 years.

Clients moving between jurisdictions while holding employee shares or options should consider the tax treatment in both the UK and their country of residence before exercising or disposing of awards.

10. Trusts and internationally mobile families

From 28 October 2026, the IHT legislation is being strengthened regarding liabilities associated with trust property. The changes are intended to align their treatment more closely with personal liabilities and strengthen existing anti-avoidance provisions.

Savings and property income received by trusts will also be subject to the new 49% rate from 2027/28.

Trust residence and taxation remain complex areas, and internationally mobile trustees, settlors and beneficiaries should obtain specialist advice before changing residence or restructuring arrangements.

11. UK property disposals by non-residents

Non-UK residents disposing of UK property remain subject to UK reporting and taxation requirements.

From 28 October 2026, penalties for failure to submit a UK property disposal return will stop accruing further once the disposal has subsequently been reported through the individual’s Self Assessment return. This does not remove the requirement to report qualifying UK property disposals within the required timeframe.

12. Overseas medical evidence for pension access

The definition of terminal illness used for pension-access purposes will be amended, including allowing registered medical practitioners overseas to provide the required medical evidence. This should make the process more practical for UK pension holders living permanently outside Britain.

What did not change?

For internationally mobile clients, some of the most important observations concern measures that were not announced.

No new Budget restriction specifically targeting QROPS or overseas pension transfers.
No new general tax charge on British expatriates or non-UK residents.
No further Budget overhaul of the four-year Foreign Income and Gains regime.
No increase in the main rates of capital gains tax.
No reduction in the overall £20,000 annual ISA subscription limit.
No reversal of the April 2027 pension inheritance-tax reforms.

The previously proposed reduction in cash ISA subscriptions for individuals under 65 has also been abandoned. The overall ISA subscription limit therefore remains £20,000 for 2027/28.

What should internationally mobile clients consider now?

Pensions and estate planning: Clients with substantial pension wealth should review the effect of pensions entering the IHT regime from April 2027 and consider pension assets alongside their wider estate rather than in isolation.

UK property: Expatriate landlords should reassess the net return from UK property ahead of the higher property-income tax rates from April 2027.

Returning to the UK: Individuals contemplating UK residence should seek advice before returning, particularly where they hold substantial overseas investments, offshore bonds, pensions, employee shares or businesses.

Business disposals: Entrepreneurs considering an exit should review the timing of disposals and their residence position given the changes to Business Asset Disposal Relief and introduction of Founders’ Relief.

Estate planning: International families should review wills, pension nominations, trusts and other estate-planning arrangements as the UK’s long-term residence-based inheritance-tax regime develops.

The importance of cross-border planning

For internationally mobile individuals, UK taxation increasingly depends not simply upon nationality or where an investment is located, but upon residence history, the nature of the asset and the timing of transactions.

A strategy that is appropriate while living in Singapore, Hong Kong, the Middle East or elsewhere may have very different tax consequences following a return to the UK. Planning before a change of residence is therefore often significantly more effective than attempting to restructure affairs afterwards.

Looking to better understand how the UK Autumn Budget changes could affect your financial plans as a British expat? Feel free to schedule a complimentary consultation with us to explore your options and discuss your circumstances.

Important information

This document provides a general summary of our current understanding of the UK Autumn Budget 2026 and related UK tax rules as at October 2026. Tax legislation and guidance may change, and Budget proposals may be amended during the legislative process.

The information is general in nature and does not constitute individual tax, legal or investment advice. Tax treatment depends upon individual circumstances and may change in the future. Individuals with UK or cross-border tax considerations should obtain appropriate professional tax advice before taking action.