Moving to, returning to or leaving the UK with an offshore policy

The starting rule: where you live when the gain arises

An individual is liable on a chargeable event gain if UK resident for the tax year in which the gain arises (ITTOIA 2005 s.465). HMRC states the converse: “When a gain arises from a policy and the individual is not resident in the UK, the gain is not subject to tax in the UK. However, this does not apply if the period of non-UK residence is temporary” (IPTM3734).

So the date the gain arises decides almost everything. For a full surrender, maturity, death or assignment for value it is the date of the event. For a withdrawal above the cumulative 5% allowance it is the end of the insurance year, which runs from the policy anniversary: HMRC's example is a part surrender on 1 April 2020 taxed in 2020/21 because the insurance year ended on 31 May 2020 (IPTM3505). Anyone planning a move should check the policy anniversary as carefully as the date of the flight.

Residence itself is decided by the statutory residence test, which is outside the scope of this article. The chargeable event rules then use your residence history in two ways: to decide whether the gain is taxed at all, and, if it is, to reduce it for the time you were away.

Arriving in the UK with a policy

Once you are UK resident, a gain on a policy you brought with you is taxed like any other bond gain: as savings income at 20, 40 or 45% in 2026/27, with no basic-rate credit because the insurer is outside the UK. The whole gain since the policy began is in charge before any relief, not just the growth since you arrived. The relief for the years before arrival is time apportionment.

Time-apportionment relief under s.528

Under ITTOIA 2005 s.528 the gain is reduced by the fraction A/B, where “A is the number of days that are foreign days in the material interest period” and “B is the number of days in the material interest period” (IPTM3732).

• Material interest period: the part of the policy's life during which you owned it, had put it into a trust you created, or had it held as security for your debt.
• Foreign days: since 6 April 2013, days in any tax year for which you were not UK resident, and the days in the overseas part of a split year.
• Whose history counts: “Time apportioned reductions will be calculated by reference to the residence history of the person liable to income tax on the gains” (IPTM3731). Where a policy has passed between spouses or civil partners living together, both periods of ownership can count; on a jointly held policy each person's share is reduced by their own history (IPTM3733).

The relief is for individuals. Personal representatives liable on a gain can use the deceased's periods of non-residence, and trustees get it only in a narrow case where the settlor has died, was UK resident at death and had been non-resident for part of the period (IPTM3735; s.528A). Older foreign policies have their own limits: before the 2013 changes the reduction did not apply to policies held by non-resident trustees or foreign institutions except in specified cases (IPTM3730). The post-2013 rules also reach earlier policies that are later varied, assigned or used as security for a debt (IPTM3731).

Time apportionment also changes top-slicing relief. Where you claim it, “you need to reduce the number of years shown on the chargeable event certificate by the number of whole years you were non-UK resident” (HS321). A smaller gain divided by fewer years can leave a large slice, so the relief usually does its work through the reduction itself, not through top-slicing. How top-slicing works in full is in chargeable event gains and top-slicing relief.

Check the policy before you arrive

Some policies written for non-UK residents give the policyholder, or a manager acting on the policyholder's instructions, a free hand over the investments. For a UK resident that makes the policy a personal portfolio bond, with a deemed gain each year of 15% of premiums plus earlier deemed gains, charged whether or not the policy grew. A policy that is fine in Dubai or Singapore can be expensive in London from the first policy anniversary after arrival. The test and the ways to restructure are in the personal portfolio bond rules.

The FIG regime does not cover policy gains

From 6 April 2025 the remittance basis was replaced by a residence-based regime. A qualifying new resident, someone who was not UK resident in any of the previous 10 tax years, can claim relief on foreign income and gains for four tax years (ITTOIA 2005 Part 8 Chapter 5). The relief applies only to the types of income listed as qualifying foreign income in s.845H. HMRC's list in RFIG45100 runs to foreign trade and property profits, interest, dividends, purchased life annuities, deeply discounted securities, royalties, settlement and estate income, offshore income gains, transfer-of-assets deemed income, foreign pensions and others. Chargeable event gains on life policies are not on it.

A new arrival who claims FIG relief on foreign interest and dividends in the first four years is still taxed in full, after time apportionment, on a gain from an offshore policy that arises in those same years. Plan the policy around s.528; FIG will not help with it.

Worked example: a new arrival surrenders in her second UK year

Hypothetical. Priya lived in Singapore for more than ten years. On 1 June 2016 she paid £1,000,000 into a policy with an Isle of Man insurer that holds only permitted funds. She moved to London and became UK resident from 6 April 2025, with no split year. She is a qualifying new resident for FIG purposes. On 1 December 2026 she surrenders the policy for £1,700,000. Her other income in 2026/27 is a UK salary of £90,000.

Figures are rounded to the pound except the slice. For comparison, had Priya been UK resident throughout the ten years, the whole £700,000 would be taxable, top-slicing would use 10 years, and the extra tax would be £302,458. Had she surrendered before 6 April 2025, while still non-resident, the gain would have been outside UK income tax altogether; what Singapore or any other country would have charged depends on its own law and is not covered here.

The relief counts days and takes no account of when the growth happened. The UK share of the whole gain rises with every day of UK residence, whether the investments did well before arrival or after it, and that share is taxed at up to 45% (47% on savings income from 6 April 2027). And while it is generous to a recent arrival, it erodes steadily. Families moving to the UK usually do best by deciding before the move which policies to keep, which to surrender while still non-resident and which to restructure.

Returning expats

A British family coming home after years abroad is treated in the same way as any arrival. A policy bought while away is taxed on its gains once you are UK resident again, reduced by time apportionment for the foreign days in your ownership period. A returning expat will rarely qualify for the FIG regime, which needs ten consecutive years of non-residence, and even a qualifying one gets nothing from it on a policy gain.

The trap is the short absence. A gain that arose while you were abroad can still be taxed if your non-residence was temporary. HMRC's conditions in IPTM3734 are that you had sole UK residence before you left, you were UK resident in at least 4 of the 7 tax years before the year you left, and the period of non-residence is 5 years or less. If they are met, “The gain is taxable in the tax year during which the person returns to the UK”, with time apportionment still available for the period abroad.

Leaving the UK with a policy

For a family leaving the UK the policy offers something a directly held portfolio cannot easily match. Income and gains inside it have not been taxed in the UK year by year. If the chargeable event happens in a tax year in which you are not UK resident, and you stay away long enough, the gain is outside UK income tax (IPTM3734). The new country of residence may tax it under its own rules, which need checking before anything is surrendered.

Hypothetical. John took out a policy on 1 July 2015 and has always lived in the UK. He leaves and is non-resident from 6 April 2027. On 1 October 2028 he surrenders the policy for a gain of £1,500,000.

• If he stays abroad for more than five years: no UK income tax on the gain.
• If he returns on 6 April 2031, after four years: he meets the temporary non-residence conditions, so the gain is taxed in 2031/32. Time apportionment applies: his ownership period from 1 July 2015 to 1 October 2028 is 4,842 days, of which 545 are foreign days (6 April 2027 to 1 October 2028). The reduction is £1,500,000 × 545 ÷ 4,842 = £168,835, leaving £1,331,165 taxable. The years for top-slicing are 13 complete years less 1 whole year abroad, so 12. The rates will be those for 2031/32; savings income is taxed at 22, 42 and 47% from 6 April 2027.

Leavers should plan the event date against the policy anniversary if it is a withdrawal above the 5% allowance, because that gain arises at the end of the insurance year. They should keep evidence of residence for each tax year, since the reduction and the temporary non-residence test both depend on it. And the insurer continues to issue chargeable event certificates and to report the policy to tax authorities under the Common Reporting Standard; see what HMRC learns about an offshore policy.

Withdrawals within the cumulative 5% allowance are not chargeable events at all, wherever you live, so a leaver who needs income can often draw it that way while abroad and leave the larger decisions for later. The mechanics are in the 5% withdrawal allowance.

Inheritance tax follows a different test

Income tax on the policy turns on residence in the year of the gain. Inheritance tax since 6 April 2025 turns on long-term residence: broadly, being UK resident for at least 10 of the previous 20 tax years (IHTA 1984 s.6A). A new arrival reaches that point after ten years. A leaver who was long-term resident carries the status for between 3 and 10 tax years after departure, depending on how long they had lived in the UK, subject to transitional rules for people who were non-resident in 2025/26. Someone who was not UK domiciled on 30 October 2024 and was not UK resident in 2025/26 is not long-term resident at all unless they were deemed domiciled, and a deemed domiciled leaver keeps the status only until the start of their fourth tax year of non-residence (IHTM47021). A policy owned personally is part of the estate whenever that test brings the owner's worldwide assets into charge; the planning, including trusts and the effect of the tail, is in inheritance tax on an offshore bond after April 2025 and on the page on inheritance tax and succession.

Whether a policy beats direct ownership in the first place is the subject of tax efficiency for UK residents.

Questions about moving with an offshore policy

Sources and authorities

Read as at 23 September 2026 for the tax year 2026/27. The examples for Priya and John are hypothetical and were checked by script, including the day counts. The example in IPTM3734 is HMRC's own.

• ITTOIA 2005 s.465: liability and residence. s.528 and s.528A: time apportionment.
• ITTOIA 2005 Part 8 Chapter 5 and s.845H: the FIG regime; RFIG45100: qualifying foreign income.
• HMRC Insurance Policyholder Taxation Manual: IPTM3505 (when gains arise), IPTM3730, IPTM3731, IPTM3732, IPTM3733, IPTM3734 and IPTM3735 (time apportionment and non-residence).
• HS321 (2026): years for top-slicing after time apportionment.
• IHTA 1984 s.6A: long-term UK residence.
• gov.uk: income tax rates; savings rates from 6 April 2027.

Last updated: 23 September 2026. Errors are corrected under our editorial standards.