The UK’s new Chancellor, Rachel Reeves, has wasted no time in reshaping the country’s tax landscape. In her first Budget since Labour returned to power, she announced a package of reforms aimed at tightening compliance, boosting revenue, and making the tax system more efficient. For UK-based savers, landlords, and especially expats with ties to the UK, these measures could have significant long-term consequences.
To understand how we can potentially navigate the new tax laws, read on. If you would like a portfolio review, please book a discovery call.
Paying Tax via PAYE
Much of the attention has focused on new rules requiring banks and building societies to collect and share National Insurance numbers with HMRC, making it easier for the tax office to automatically deduct tax on savings interest via the PAYE system. Combined with the abolition of the non-dom regime and adjustments to how offshore income is treated, these developments mark the beginning of a new era for cross-border taxation.
There has been confusion and some misinformation about the latest announcements. Some media commentary and social media posts suggested that anyone with £25,000 in a bank account would suddenly face a new tax. That is not the case. What Reeves has introduced is a requirement, beginning in April 2027, for banks and building societies to collect customers’ National Insurance numbers and pass them to HMRC.
This will apply not only to new customers but also to existing savers, allowing HMRC to cross-check savings income against each taxpayer’s allowance and, where tax is due, adjust the individual’s tax code so that it can be collected automatically through PAYE.
The Personal Savings Allowance remains unchanged: £1,000 per year for basic-rate taxpayers, £500 for higher-rate taxpayers, and nothing at all for additional-rate taxpayers.
It is not the balance in your bank account that matters, but the amount of interest you earn and whether it exceeds your allowance.
At first glance, this reform might not seem dramatic, but the difference now lies in enforcement and efficiency. HMRC will have much more visibility into who is earning what, and the PAYE system will automatically collect tax without relying on individuals to complete a self-assessment return. For the government, this closes a compliance gap worth hundreds of millions of pounds.
For individuals, particularly expats who are still UK taxpayers or who have income from the UK, it means less control over the timing of tax payments, fewer opportunities to let small amounts slip through unnoticed, and the need to ensure all income streams are properly accounted for, especially when combined with property rental income or dividends.
Personal Savings Allowance
The Personal Savings Allowance thresholds are crucial. Consider an expat with £50,000 in UK savings earning four percent interest. That amounts to £2,000 a year. A basic-rate taxpayer would only have £1,000 tax-free, while the remaining £1,000 would be taxable at 20 percent, meaning a £200 tax bill that HMRC would collect automatically through PAYE. A higher-rate taxpayer with £200,000 in savings at the same rate would earn £8,000 a year in interest. With only a £500 allowance, £7,500 becomes taxable at 40 percent, resulting in a £3,000 liability deducted directly from salary or pension.
In both cases, HMRC will identify the liability directly from bank data and collect it. For non-resident expats, the position depends on whether they are still classed as a UK tax resident under the Statutory Residence Test. Even if they are non-resident, income arising from the UK, such as interest on UK bank accounts or rent from UK property, can still be taxable in the UK.
Non-Dom
The Reeves Budget also confirmed the abolition of the non-domiciled tax regime, one of Labour’s headline policies. Previously, UK residents who claimed non-dom status could use the remittance basis, meaning they were only taxed on overseas income or gains if they brought that money into the UK. Under the new rules, all UK residents are taxed on worldwide income and gains regardless of domicile. Transitional reliefs may apply for those who previously relied on the remittance basis, but the overall direction is clear: offshore income will be taxed like UK income.
Importantly, an earlier proposal to treat offshore accounts as “debts brought into the UK” has been reversed after consultation, avoiding a potential trap for expats who hold overseas money. For those who may return to the UK in the future, this change could have a major impact on long-term planning, since sheltering income offshore will no longer provide the same tax advantages.
For many expats, property remains the most significant connection to the UK. Those who retain a property and rent it out will not see any direct changes to how that income is taxed, but they will feel the effect of tighter enforcement. Rental income remains taxable in the UK, even if the landlord is non-resident. HMRC’s improved data collection will make it harder to under-report savings or mix property income with other forms of interest, and landlords who rely on savings accounts for deposit protection or rent buffers will find the interest on those accounts automatically reported and taxed.
Combined with the end of non-dom status, this could result in higher overall liabilities for expats with both UK property income and offshore savings.
Statutory Residence Test for Expats
Expats should carefully monitor their residency status under the Statutory Residence Test, which determines whether they owe UK tax on worldwide income or only UK-source income. For those who are genuinely non-resident, holding savings offshore may reduce exposure to UK tax. International platforms such as Ardan, Novia Global, or brokerage accounts like Interactive Brokers can provide efficient structures, though compliance with the rules of the country of residence remains essential.
Those with UK rental property should treat rental accounts as taxable, both in terms of rent and any interest earned on deposits, and consider whether offshore structuring or corporate ownership could be beneficial. For anyone who previously relied on the remittance basis, seeking professional advice is vital, as the abolition of non-dom status could significantly increase the UK tax bill upon return.
Transitional reliefs may help, but proactive planning is essential.
Blogs I have written on the platforms I have listed above:
- Ardan International Review
- Novia Review For Expats
- Best Investment Platforms for Expats in 2025: Fees, Funds & Features Compared
What these reforms ultimately signal is a shift in the UK’s approach to tax collection. HMRC is modernising its systems by using real-time data and PAYE adjustments, reducing reliance on voluntary declarations and making compliance almost automatic. Expats with UK connections are in the spotlight, especially those with savings, property, or offshore holdings that were once more easily shielded. The government’s direction of travel is clear: greater transparency, less tolerance for tax arbitrage, and fewer grey areas.
For British expats, this does not mean an overnight shock, but it does represent a fundamental change in how savings and offshore income are treated. The days when small amounts of bank interest or overseas income could slip under the radar are coming to an end. The smart approach is to treat these reforms as an opportunity to restructure savings efficiently, maximise tax-free allowances, and ensure compliance before HMRC’s systems make under-reporting impossible.
If you are an expat with UK ties, whether through savings, property, or plans to return, the message is simple: now is the time to review your financial strategy. These changes are not about penalising savers but about ensuring consistency and closing loopholes. With the right planning using ISAs, considering offshore platforms, and taking professional advice, you can stay compliant while still making your money work for you.
We specialise in helping British expats navigate the complexities of UK and offshore tax planning. If you would like to discuss how these reforms might affect you, get in touch with us today using the button at the bottom of this page or through my contact page.
Blogs I have written that you may like:
- British Inheritance Tax Planning for Expats in Thailand
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Under the new laws introduced by Chancellor Rachel Reeves, UK banks and building societies are now required to share National Insurance numbers and interest data directly with HMRC. For expats, this means any remaining UK-based savings accounts are now under “real-time” surveillance. If your interest exceeds your Personal Savings Allowance, HMRC can now automatically deduct tax via the PAYE system or adjust your tax code without waiting for a self-assessment return.
If you are a tax resident in another country (such as Thailand or Singapore) and have successfully updated your status with your bank, you may be eligible to receive interest gross. However, the new 2026 enforcement measures mean that if HMRC still classifies you as a UK resident under the Statutory Residence Test, they will automatically tax your UK interest. Many expats are moving their cash to offshore multi-currency accounts in neutral jurisdictions to ensure their interest isn’t automatically caught in the UK tax net.
As part of the abolition of the non-dom regime, Rachel Reeves introduced a Temporary Repatriation Facility (TRF). This allows expats who previously used the remittance basis to bring “designated” offshore income and gains into the UK at a reduced tax rate (12% for the first two years of the scheme). For expats planning a move back to the UK in 2026, this offers a limited-time window to clean up offshore capital before the new residency-based tax system fully takes hold.
