A simple enough idea. But the truth is never that simple. The UK tax system follows you more closely than you might expect, and if you’re not careful, HMRC can end up being the biggest beneficiary of your sale.
The first thing that you need to consider is the timing of the sale of your business. When you actually sell, and where you’re living at the time that the deal goes through is massively important. I’ve seen people assume that leaving the UK a few days before completion is enough. Well, it may well not be for you. If HMRC still considers you to be resident when the paperwork is signed, the gain is taxable here, no matter how fast you booked that flight and got started on the complimentary Emirates hors d’oeuvres.
And this is the issue that has seen many a UK expat come unstuck- the “temporary non-residence” rules. If you were UK-resident for four out of the previous seven years and you return within five tax years, HMRC can reassess and charge capital gains tax on the sale (or indeed the sale of any other assets held before becoming non UK resident( as if you never left. You could literally be a day away from the five year mark and you’d be liable for UK tax on the gain for the sale, all those years ago. In practice, that means you may need to commit to being away for at least five full tax years. Anything less can undo the whole exercise.
Of course, not everyone has the appetite (or family circumstances) to stay away for half a decade. Thus, some owners will look instead to Business Asset Disposal Relief. If you qualify you’ll pay 10% capital gains tax on the first £1 million of gains (was £10 million up until recently). The rules are specific — two years of ownership, at least 5% of shares and voting rights, and an officer or employee role. And you must claim it. Miss that step and the opportunity is gone. As above, it’s less generous than it used to be, but for many, it still takes a large chunk out of the bill.
Destination also matters. Countries like the UAE, Singapore or Monaco don’t tax capital gains. That’s part of their attraction. Dubai, in particular, has built a reputation as a hub for British founders: zero tax, a familiar legal system (which can still require some local help to navigate), and a thriving business community. But moving isn’t just about tax. You’ll need to show a genuine change of life, home, family base, even school choices if you have children. Keep too many ties in the UK and HMRC may not accept that you’ve really left. The Statutory Residence Test is too complex to go into here, however, any professional adviser that you engage with must understand all the finer details of the complex SRT rules.
Then comes the question of what to do with the proceeds. Cash in the bank is rarely a good long-term plan. Many of our ex-UK clients will make use International Portfolio Investment Bonds (very popular in the UK among UHNW and HNW investors). Offered by established British financial organisations, these can offer a way to invest globally, change funds when you wish, whilst allowing investments to grow tax free with no CGT. If you then become UK tax resident in the future, you can withdraw 5% each year without any immediate liability for tax. You can also benefit from time-apportionment relief which can further help to reduce the tax due by recognising the years you were non-resident.
Alongside bonds, an international private-bank wrap platform is worth considering. It’s essentially a globally portable structure that allows you to hold and manage a wide range of assets in one place whilst in parallel all of your day-to-day multi currency banking, in addition to arranging mortgages, fixed deposits and more. For internationally mobile entrepreneurs, that sort of flexibility is invaluable. It reduces the need to rebuild your investment setup every time your life crosses a border.
None of this, however, is just numbers on a page. Selling a business, and relocating abroad, dramatically changes your life. I’ve worked with founders who thrived in new environments — and others who returned earlier than planned because of family, health, or simply a sense of disconnection. Those decisions are personal, and they matter as much as the tax savings.
The lesson? Don’t let tax drive everything. By all means understand the rules, seek quality advice, use reliefs like BADR, plan around the five-year trap, and put your wealth inside structures that can travel with you. But think about your family, your future, and what “home” will mean once the business is sold. That combination — good planning and clear priorities — is what turns a successful exit into a successful new chapter. Further, even if you’re pretty convinced that you will not return to the UK, consider having in place arrangements that will work perfectly fine, should you choose to do so. I’ve been working with UK expats for 20 years and the majority return home at some point.
In the end, the UK has a habit of pulling its entrepreneurs back, proof that you can take the entrepreneur out of Britain, but not Britain out of the entrepreneur. As the French say, ‘plus ça change’.
