The temporary non-residence rule
A short absence is not a clean break. Come home inside five full tax years and HMRC can tax gains and certain income you banked while away — in your year of return.
If you were UK-resident in 4 of the 7 tax years before you left and your non-residence lasts five years or less, the temporary non-residence rule taxes certain income and gains banked while away — gains on assets held before you left, close-company distributions, released director loans, certain pension withdrawals and bond gains — in your year of return. A clean break means staying away more than five full tax years (HMRC HS278, 2026; RFIG21500; 2026/27).
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Who is a "temporary non-resident"?
You are caught if all three hold: you had sole UK residence for at least 4 of the 7 tax years before your year of departure; your period of non-residence sits between two periods of sole UK residence (you came back); and that absence was five years or less (HMRC HS278, 2026; RFIG21500).
What gets taxed on your return?
Items realised while away are treated as arising in your year of return and taxed then:
| Side | What is clawed back |
|---|---|
| Capital | Gains on assets you held before you left and disposed of while away |
| Income | Close-company distributions (own-company dividends) — all of them from 6 April 2026 |
| Income | Loans to participators released or written off while away |
| Income | Certain pension withdrawals (flexi-access drawdown, certain lump sums) |
| Income | Chargeable-event gains on insurance bonds / life policies |
How long is a clean break?
More than five full tax years of non-residence (each tax year runs 6 April to 5 April). Assets you acquire after you leave are generally outside the charge. And split-year treatment is not a safe harbour — the overseas part of your departure year still counts towards the temporary-non-residence period. Before you sell anything material or take a large dividend on a planned short stint abroad, get advice.
Are you a clean-break leaver?
Confirm your residence position first, then plan disposals around the five-full-tax-year clock.
Common questions
What is the temporary non-residence rule (the 5-year rule)?
It is anti-avoidance: leave the UK and return after a short absence, and certain income and gains banked while away are taxed in your year of return. It bites if you had sole UK residence in 4 of the 7 years before leaving and your non-residence lasts five years or less. A clean break means staying away more than five full tax years. (HMRC HS278, 2026; RFIG21500; 2026/27.)
How long must I stay abroad to avoid the clawback?
More than five full tax years. If your absence is five years or less, gains on assets held before you left, close-company dividends, released director loans, certain pension withdrawals and bond gains can be taxed in your year of return. (HMRC HS278, 2026; RFIG21500–21620; 2026/27.)
Does split-year treatment protect me from the 5-year rule?
No. The overseas part of a split year still counts towards the temporary-non-residence period, so a short absence can pull banked gains and income back into UK tax on return even if your departure year was split. (HMRC HS278, 2026; RFIG21010; 2026/27.)