Temporary Non-Residence Rules2025/26: Key Tax Changes for Landlords Living Abroad

This article explains the key tax changes for landlords living abroad, focusing on the UK’s Temporary Non-Residence (TNR) rules and the reforms due to apply from 6 April 2026.

It outlines how landlords and property developers who leave the UK for a short period may face a UK tax charge when they return, particularly where they have used company structures to extract profits while overseas, and it highlights that HMRC is tightening the rules to prevent tax-motivated non-residence.

Temporary non-residence: do the rules apply to you?

The Temporary Non-Residence (TNR) rules are aimed at people who were UK resident for a number of years, then leave the UK, and later return after a short period abroad.

You are more likely to fall within TNR if you were UK resident in at least 4 of the 7 tax years before you left, and you return to the UK within 5 years of becoming non-resident. If you stay non-resident for more than 5 years, you are generally outside the “temporary” window (often described as 5 years plus one day)

So , if you plan to come back to the UK within that 5-year window, it is worth reviewing what income or value you have taken while away because some items can be taxed when you return under the TNR framework.

If it looks like the TNR rules could apply to you, the next step is understanding what changes from 6 April 2026, because the reform makes the return date far more important for anyone taking profits out of a company while living abroad.

The 2026 rule change: Why your Return Date now matters

There is currently no charge to tax if the distribution or dividend is made from ‘post departure trade profits’ (profits that accrue to the company after the individual left the UK).

However, from 6 April 2026, the draft reform removes the current “post-departure trade profits” protection in the Temporary Non-Residence rules for dividends and other distributions from close companies (which commonly includes property SPVs (Special Purpose Vehicle).

In the context of the TNR changes, SPVs matter because many property SPVs are “close companies” (owned or controlled by a small number of people, often family members), and dividends from those companies are the type of payments HMRC is focusing on.

Here, A close company is a company that is under the control of a small group, typically five or fewer participators (such as shareholders), or any number of participators who are also directors. Many property SPVs fall into this category because they are commonly owned and controlled by an individual, couple, or family group, so dividends and other value extracted from the company are often central to HMRC’s analysis.

It is not just dividends: what counts as taking value out

Once you understand the 6 April 2026 shift, the next thing to pin down is what counts as value being taken out of a company while you are abroad.

HMRC will focus on anything that looks like extracting profits or company value during the non-resident period, especially where you are using a property SPV or family company. That can include straightforward dividends, but it can also include other ways of taking money or benefits out of the company that do not look like dividends on paper.

Common types of payments and benefits to check include:

• dividends (cash or non-cash)
• payments to you as a shareholder
• money taken through a director’s loan account
• personal expenses paid by the company
• indirect payments through connected parties

Why landlords using property SPVs face more risk than landlords who own property personally

Many landlords living abroad holds UK property through an SPV because it keeps the property separate makes it easier to manage growth and financing.

 The issue is that a property SPV is usually a close company, owned or controlled by a small number of people (often the landlord and family members). That is exactly the type of structure the Temporary Non-Residence rules focus on when a landlord leaves the UK for a short period, takes money out while overseas, and then returns.

For landlords who own property personally, the UK tax position is usually driven by rental income rules and the non-resident landlord and disposal regimes. For landlords using a close company SPV, there is an extra layer of exposure: HMRC can look closely at how the landlord has extracted profits or cash during the time abroad, and a UK tax charge can arise when the landlord returns to the UK.

Director’s loans: why taking money out as a “loan” can still create a tax problem

Many landlords living abroad do not extract profits as dividends. Instead, they take money out through a director’s loan account, often thinking it is safer because it can be repaid later.

Under the direction of the 2026 reforms, this is an area HMRC is expected to challenge more aggressively, especially where the “loan” looks like a long-term withdrawal of company funds rather than genuine borrowing.

HMRC risk is higher where:

• the loan balance stays outstanding for a long time
• there is no clear repayment plan or evidence of affordability
• the loan is later written off or effectively ignored
• repayments start only when HMRC becomes involved

if money is taken out while overseas and it does not behave like a real commercial loan, HMRC may treat it as value extraction linked to the Temporary Non-Residence rules, rather than accepting it at face value.

Tax Issue: The Real Risk under Director’s Loan

First, there's the S455 CTA 2010 charge—a corporation tax charge on the company where a loan to a participator remains outstanding nine months after the company's year-end. This applies regardless of residence. It is known as S455 Tax Charge

Second, there's the TNR issue, which concerns what happens if the loan is subsequently released or written off. Under s415 ITTOIA 2005, when a loan is written off, the participator is treated as receiving a dividend equal to the amount released.

The hidden risk for landlords abroad: tax when you return

One of the biggest risks for landlords living abroad is the timing mismatch.

Under the Temporary Non-Residence approach, amounts taken out of a close company while overseas can become taxable in the year you return to the UK. That can create a real problem where the money was received and spent years earlier.

This is often described as a “dry tax charge”, because the UK tax bill arises later even though there is no new cash coming in at the time. It is especially relevant for landlords who have used overseas periods to extract profits from an SPV to fund living costs, new investments, or property purchases.

Double taxation relief: Avoid paying tax twice, the paperwork that matters

Landlords living abroad are often taxed overseas on dividends or other income they receive while non-resident. If the Temporary Non-Residence rules pull those amounts back into UK tax when the landlord returns, double taxation relief may be available to reduce the UK charge, broadly by giving credit for overseas tax paid on the same income. Here, you can claim DTA double tax relief up to the lower of (1) the foreign tax actually payable on that same income (often capped at the treaty rate) and (2) the UK tax charged on that income when it is brought into charge under TNR.

In practice, relief is only as good as the evidence. To protect your position, it is important to keep:

• dividend vouchers / distribution statements (showing dates and amounts)
• proof of overseas tax paid (tax returns, assessments, payment receipts)
• bank statements and tracing (to show what was paid, when, and to whom)
• company paperwork supporting the payment (board minutes, loan account records if relevant)

Before you return: key actions for landlords living abroad

If you are a landlord living abroad and considering a return to the UK, it is sensible to review your position in advance.

The Temporary Non-Residence rules can bring certain amounts taken from a company while you were overseas into UK tax when you return, so the key is to understand whether you are within the temporary non-residence window and what value has been extracted during that period.

Before you return, landlords living abroad should consider:

Conclusion

For landlords living abroad, the 2026 Temporary Non-Residence changes make return planning far more important. Amounts taken from a property company while overseas, whether as dividends, through loan accounts, or via connected arrangements, may give rise to a UK tax charge in the year you come back.

The risk is not just the tax itself, but the timing, as a liability can arise long after the cash was received and spent.

At UKPA, we help landlords and property developers deal with these return-planning issues. If you are considering a UK return, we can assess whether the Temporary Non-Residence rules apply, identify any exposures linked to company extractions, and advise on the right documentation and relief claims so your position is well supported and any risks are dealt with early.