Expat Taxes: What International Investors Need to Know

Often, yes, and for one of two reasons.

Take a British engineer who moves to Dubai and keeps a let flat in Leeds. Once non-resident, they pay no UK tax on income or gains arising outside the UK, but they usually still pay tax on their UK income. That is the residence logic, the general case: the country where you are tax resident can usually tax your worldwide income, and the country you left keeps what arises on its soil.

A US citizen making the same move meets the citizenship logic. The yearly federal return follows the passport holder abroad: income, estate and gift tax returns are filed, in the IRS's words, “in the same way as those residing in the United States”. Two countries can then claim the same salary.

One point of vocabulary: “expat taxes” are the yearly taxes of a person living abroad, whereas the US “expatriation tax” is a separate charge tied to giving up citizenship or a long-held green card, not to moving abroad. A tax treaty does little to change the picture for a US citizen, and the reason is one clause, the saving clause in the UK-US tax treaty.

Everything below assumes you have actually become non-resident. The first question, whether you are still tax resident in the country you left, is decided by that country under its own rules, and the move alone settles nothing. The country you joined applies its own rules separately, so one answer never binds the other.

Non-residence then narrows the UK's claim without ending it. According to GOV.UK, a non-resident usually still pays UK tax on four kinds of UK income:

On the same page, the State Pension and interest from UK government securities are usually not taxed in the UK for a non-resident. Other pensions may be taxed by the country where you live and by the UK, and a tax treaty between the two decides where the tax is paid.

Your letting agent, or your tenant where there is no agent and the rent exceeds £100 a week, deducts basic rate tax (20% for 2026 to 2027) from the rent after the expenses they have paid. They give you a certificate at the end of the tax year.

You can apply to HMRC to receive the rent with no tax deducted, and approval usually takes effect from the first day of the quarter in which the application was received. Approval is not exemption. The rent is still declared in a Self Assessment return.

Selling is a separate matter: a non-resident usually pays no Capital Gains Tax on most UK assets, but does on UK property or land.

Paperwork travels with you too.

On the UK side, you must tell HMRC when you leave to live abroad permanently, or to work abroad full-time for at least one full tax year. The residence pages cannot be filed through HMRC's own online service. The year of departure may qualify for split-year treatment under the UK rules, which divides it into a resident part and a non-resident part under set conditions.

The US side holds the trap. Gross income for the filing test includes income you exclude as foreign earned income or as a housing amount, so a salary entirely covered by the exclusion still triggers a return. For 2025 returns, the IRS threshold is $15,750 for a single filer under 65 and $31,500 for a married couple filing jointly, both under 65. Net self-employment earnings of $400 or more require a return whatever your gross income.

The automatic extension to 15 June applies where your tax home and abode are outside the United States. It moves the filing date only: interest runs from 15 April on any unpaid tax.

The headline figure is $132,900. According to IRS Revenue Procedure 2025-32, that is the Foreign Earned Income Exclusion per qualifying person for tax years beginning in 2026. It covers foreign earned income only, meaning pay for services performed abroad, and two qualifying spouses each have their own. The 2025 amount was $130,000.

Both routes start from the same condition: a tax home in a foreign country, generally your main place of business or post of duty, wherever the family home is. You have no foreign tax home for any period in which your abode is in the United States. You then need to meet one of two tests:

The formula is short: your housing expenses, capped by a limit, minus a base amount. For 2026:

The housing exclusion is figured first and must be taken in full. For an employee, the whole housing amount is treated as paid with employer-provided amounts, so it is an exclusion; a self-employed person takes a deduction instead. Rent, utilities other than telephone, property insurance, furniture rental, residential parking and household repairs count.

Take an unmarried US citizen employed by a Dubai company, who qualifies for the whole of 2026. Salary: $240,000. Rent and utilities: $60,000. According to the UAE Government portal, “The UAE does not levy income tax on individuals”, so no foreign tax has been paid and none of the lines below is a credit.

The example rests on these assumptions:

These amounts are an illustration, computed from the official 2026 amounts under the method of the IRS worksheet (2025 edition, the 2026 edition not being published) and the 2026 rate schedule. They are not official figures.

Two readings matter. The exclusions take $168,810 out of a $240,000 salary, and about $15,000 of US tax remains, roughly 6.2% of the salary, in a country that itself levies no income tax on individuals. The income left is also taxed at 24% and 32%, not from the bottom of the scale: taxed as if it were the first dollars earned, the same $55,090 would bear $6,831.80, a difference of $8,159.80.

A salary under the ceiling makes the exclusion look complete. Above it, four limits show.

The other route is a credit for tax paid abroad, and which of the two does the work depends on where you live, the rate you bear there and how long you stay. Where the host country levies no income tax on individuals, there is no foreign tax to set against the US bill, so the exclusion does all the work; where it taxes more heavily than the United States, a credit for the tax paid there can leave no US tax on that income. The two cannot be combined on the same income, and using a credit on excluded income counts as a revocation. The arithmetic of that route belongs with the foreign tax credit and the other relief methods.

Income tax and social security are two separate ledgers. Neither the exclusion nor an income tax treaty settles your contributions.

If you are British. You usually pay social security contributions in the country where you work. Where no agreement exists, UK National Insurance continues for your first 52 weeks abroad if the work is temporary, your employer has a place of business in the UK and you are ordinarily resident there.

According to GOV.UK, voluntary Class 2 contributions can no longer be paid for time abroad from 6 April 2026. Class 3 (£18.40 a week for 2026 to 2027) is open only to a person who previously lived in the UK for 10 years in a row or paid 10 years of qualifying contributions, against 3 years before. Voluntary contributions can only be paid for the past 6 years.

GOV.UK also says the State Pension only increases each year for a person living in the European Economic Area, Gibraltar, Switzerland or a country with a social security agreement with the UK. The UAE is not in the list of agreement countries in HMRC's NI38 guidance, updated on 7 July 2026. Read together, the two pages point to no yearly increase for a pensioner living in the UAE, although neither says so in terms.

If you are American. US Social Security and Medicare taxes generally do not apply to wages for services performed as an employee outside the United States, unless you work for an American employer or fall under one of the listed exceptions. A totalisation agreement removes dual coverage and dual contributions for the same work. Self-employment is the case that bites: self-employment tax applies to any US citizen with self-employment income, even where that income is excluded from income tax.

According to the UAE Government portal, there are no pension schemes for expatriate workers, who are entitled to an end-of-service gratuity calculated on the basis of the last basic salary, after one year of continuous service. An expatriate employee of a Dubai employer therefore builds no state pension there, which is why the home-country ledger matters.

Each of these is documented by the authority concerned.

All six arise after arrival. What is decided when planning a move between countries is a separate subject.

Your new country applies its own rules on top of whatever the old one still claims. In the UAE, as its official portal puts it, individuals pay no income tax. Under the Corporate Tax guide of November 2023, a natural person's wage, personal investment income and real estate investment income sit outside Corporate Tax, which a natural person enters only where business turnover exceeds AED 1 million in a calendar year. Tax residence has existed there as a legal status for individuals since 1 March 2023.

A host with no income tax cancels nothing. UK tax on UK rent, the US return and the residual US tax of the example all remain, and the absence of local tax changes which US relief works. The United States has no income tax treaty with the UAE, on the IRS list updated through 26 September 2025, while the UK signed a convention with the UAE in 2016, part of the UAE's extensive treaty network.

Elsewhere the host asks more. Singapore taxes a non-resident's employment income on its own terms and asks for tax clearance when the employment ends. In the European Union, the country where you are tax resident can usually tax your worldwide income.

Tax is one line of a larger file that also holds banking, currency, cover and your estate, which is the subject of the wider expat financial plan.

This guide is provided for general information purposes only and does not constitute tax or financial advice. Rates, thresholds and amounts are those read on official sources in October 2026 and may change; the worked example is an illustration based on stated assumptions, not an official calculation. Tax treatment depends on individual circumstances, and you should seek advice from a qualified adviser before acting.