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Press release featured in: The Times, Daily Mail, London Evening Standard, GB News, Business Matters, Birmingham Live, FT Adviser, as well as others.
UHY Hacker Young is calling on HMRC to urgently clarify that British expats forced to return from the Gulf due to the Iran war will not face unexpected UK tax exposure - an issue already troubling families who are making emergency arrangements to come back to the UK.
Sandra Jeevan, partner and head of private client and trust in our London office, explains that expats returning abruptly could face exposure to UK tax if their time in the UK causes them to become UK‑resident under the Statutory Residence Test. This could bring their worldwide income and gains into the UK tax net at short notice.
There are around 300,000 Britons living in Gulf countries and over 100,000 have now requested repatriation flights, according to UK Government sources.
Under current rules, an individual must usually remain outside the UK for a complete tax year to ensure foreign income remains outside the UK tax system. An unexpected or early return could therefore result in income and gains becoming taxable in the UK - often contrary to the individual’s original expectations and financial planning.
Sandra Jeevan says: “We are hearing from many families who never intended to return to the UK this year but now have had no choice. They could face exposure to UK tax simply because their emergency return alters their UK residence position.”
“When you are trying to move your family to safety, you are not focused on day‑count rules or technical residence tests. While HMRC has updated its guidance to acknowledge that the outbreak of war can qualify as an ‘exceptional circumstance’ for residency purposes, the rules remain highly restrictive and are strictly limited in scope.”
“HMRC maintains a very narrow view of what qualifies. Choosing to stay in the UK to be with family after the initial crisis has passed typically does not count as ‘exceptional’.”
“Some returning expats may also face UK Capital Gains Tax (CGT) if they resume UK residence before completing the minimum non‑residence period required to fall outside the temporary non‑residence rules. This typically affects gains realised on business interests, shareholdings or other non‑UK assets during their period overseas, particularly where individuals had structured disposals on the assumption that they would remain non‑resident for the full required timeframe.”
Updated 2026 position on domicile, FDR and residence
As of April 2025, the concept of formerly domiciled individuals (FDR) has been abolished and replaced with a fully residence‑based system for income tax, CGT and IHT.
Although the concept of formerly domiciled individuals has been removed, anyone returning to the UK abruptly in 2026 is still strongly encouraged to review their residence pattern and understand their potential exposure under the new rules.
This remains particularly important where individuals had periods of non‑residence before the rule change and may still be affected by transitional provisions relating to pre‑2025 foreign income and gains.
Sandra Jeevan adds: “People relocating due to conflict simply haven’t had the chance to structure their affairs properly. Many are already dealing with flights, housing, and schooling. Understanding potential tax exposure early can prevent further financial strain.”
“Given the extraordinary circumstances, HMRC should adopt a pragmatic and sympathetic approach. In the meantime, anyone unsure about their UK residence position or exposure under the new regime should seek advice immediately.”
UHY Hacker Young’s message to affected individuals
We encourage any British expat affected by the conflict - or anyone uncertain about the effect of the new residence‑based regime - to speak with a professional adviser as soon as possible.
Our team is already assisting returning families with:
- understanding whether they may become UK‑resident unexpectedly
- assessing exposure to UK tax on worldwide income or gains
- reviewing residence patterns under the post‑2025 rules
- analysing transitional provisions for pre‑2025 foreign income and gains
- planning steps to mitigate unwanted tax exposure
A short conversation now can provide clarity and avoid costly surprises later.
