UK tax residence, your NZ rental, and the 120-day question

I had a Teams call a couple of days ago with a Kiwi who's thinking about a move to the UK. We do a few of these every month, so nothing unusual there, but her question was a good one and I've now been asked a version of it enough times that it's worth writing down properly.

She'd already made her mind up about one thing before we started. She had to sell her NZ rental property before she got on the plane. She was quite firm about it, and when I asked why, she said what a lot of people say: "I don't want to move to the UK and then have HMRC taxing me on a New Zealand house."

Fair enough. Sensible instinct, and she's not wrong to be thinking about it. The assumption here is that from the moment you land in the UK, the HMRC are keen to hear all about your worldwide income and gains. And yes, usually this is true, but sometimes it isn't - especially if you are just dipping your toe into the world of moving to the UK.

If you plan it properly you can go over to the UK, take a job, live there for a few months and come home again without ever having been UK tax resident at all. So let's walk through her situation, and get into the weeds a bit.

Understanding the Scenario

I'll call her Anna. She's 43, a veterinary nurse from Whanganui, and she's got an application in with a group of practices near Bristol. If it comes off she could be flying out in October.

Anna owns two properties, both sitting in a family trust that was set up about a decade ago on a lawyer's advice, back when the UK wasn't on anybody's radar. She lives in one of them. The other is a rental she's held for around seven years, bought as a retirement plan, and it's roughly doubled in value since.

Her plan is to give the UK a proper go before committing to it. She lived there briefly years ago, she's got no kids and no partner, and she wants a change and better career options. But she doesn't want to burn the boats. Sell the rental, move everything, and then discover after four months that Bristol in February isn't for her.

So the question isn't really "should I sell the rental?" It's "when am I allowed to sell it without the UK taking a slice?" Those are different questions, and the second one has a much better answer.

Why UK Tax Residency Matters Here

UK tax residence isn't decided by your visa, your job offer, your intentions, or the date stamped in your passport. It's worked out one tax year at a time, running 6 April to the following 5 April, using something called the Statutory Residence Test (SRT). These rules are fairly prescriptive so they're not too hard to understand, but like an onion, there are several layers.

If you're UK tax resident, the UK taxes your worldwide income and gains, which is where Anna's rental comes into it. If she sells while she's UK resident, the gain is potentially in scope for UK Capital Gains Tax even though the house has never been anywhere near Britain. If she sells while she's non-resident, it isn't.

The good news is that the SRT is mechanical. It's a set of rules with numbers in them, so it isn't a matter of opinion or negotiation or how convincing your story is. Count the right things and you get an answer, which also means you can work the answer out before you go and plan around it. That's a genuinely better system than the one we've got in New Zealand, where the permanent place of abode test can leave you arguing with the IRD about whether a set of skis stored in a spare room at your parent's house makes that your permanent place of abode (take that with a pinch of salt, but seriously, 1988 called and they want their NZ tax residency rules back).

We've covered the SRT in a lot more depth in our UK tax residency guide for Kiwis and Aussies, so I'll keep this to the parts that matter for a trial run.

The Automatic Tests

Before you count anything else, there are the automatic tests. If one of these catches you, nothing else matters, so it's worth clearing them first.

You're automatically UK resident if:

1. You spend 183 days or more in the UK in the tax year.
2. or, your only home is in the UK for a period of 91 days or more, and you're actually there on at least 30 days in the tax year.
3. or, you work full-time in the UK across a 365-day period, with more than 75% of your working days spent in the UK.

You're automatically non-UK resident if:

1. You weren't UK resident in any of the previous three tax years and you spend fewer than 46 days in the UK in the tax year.

Two of those matter enormously for Anna.

The only home test is the reason I suggested she does not rent out her own house while she's testing the water. It's a genuinely tempting thing to do, the rent is nice, the house is sitting empty, and it feels like a sensible bit of admin. But the word doing the work in that test is only. Keep a home available to you in New Zealand, spend a decent chunk of time in it during the tax year, and the test can't bite. Rent it out and you've quietly handed HMRC a much better UK tax residency argument than they had before.

The full-time work test is the one to keep an eye on if the trial turns into something longer. It's not usually a problem for a genuine few months, but it stops being theoretical once you settle in properly.

Anna clears both. So we move on to the ties.

The Sufficient Ties Test

If you're not caught by an automatic test, residence comes down to a combination of how many days you spend in the UK and how many "ties" you have to it.

If you haven't been UK resident in any of the previous three tax years, the rules call you an arriver, and you've only got four ties to think about:

1. The family tie. A UK resident husband, wife, partner or child under 18.
2. The accommodation tie. Somewhere in the UK available to you for a continuous period of 91 days or more, where you spend at least one night.
3. The work tie. More than three hours of work in the UK on at least 40 days in the tax year.
4. The 90-day tie. 90 days or more spent in the UK in either of the two previous tax years.

There's a fifth one, the country tie, but that only applies to people leaving the UK rather than arriving, so as a new arrival you can ignore it.

Running Anna through those, she has no partner and no children under 18, so no family tie. She'll have somewhere to live near Bristol for the length of the contract, so that's an accommodation tie. She'll be working, so that's a work tie. And she hasn't set foot in the UK since a holiday a good few years ago, so no 90-day tie.

Two ties.

Days Spent vs Ties Needed

Here's where the ties and the day count meet. For an arriver, the thresholds work like this:

Anna has two ties, so she stays non-UK resident right up until she crosses 120 days in the tax year.

That's a useful amount of room. It's about four months, which is enough to take the job, live in the place, work out whether she likes it, and fly home again without ever having become a UK taxpayer. And this isn't a loophole or a scheme, it's the test doing exactly what it was designed to do. The whole point of bringing in the SRT back in 2013 was to replace a fog of case law with something a normal person could count.

Where the Trial Run Goes Wrong

Three things trip people up on this plan, and all three are avoidable if you see them coming.

The 90-day tie looks backwards, not forwards. It picks up UK days in the two previous tax years. So a couple of really long summer holidays before you'd even thought about moving can hand you a third tie, and that drops your threshold from 120 days to 90. Count your old trips before you start counting your new ones.

Renting out the home you're keeping. I've covered it above but it's worth saying twice, because it's the decision people make without realising it's a tax decision at all.

"Six months" is more than 120 days. When the math ain't mathing. A genuine six-month trial is roughly 180 days, and with two ties that makes you UK resident for that tax year. If staying non-resident is the priority, the trial needs to be shorter than instinct suggests, or timed so it straddles 5 April and the days fall into two separate tax years. Anna going over in October and coming back in March would be cutting it fine. October to late January is comfortable. A lot of people just read about the 183 day rule, but you need to go deeper than that.

So the day count gives you real flexibility, but it isn't a free pass, and anyone telling you that you can just pop over for as long as you like is selling something, and it's not tax advice.

What Happens If Anna Decides to Stay

Say she loves it. She crosses 120 days, she becomes UK resident, and now that rental property is in scope. Does that mean she should have sold before she left after all?

Probably not, and because more good fortune comes Anna's way. The old non-dom rules are gone, and what replaced them from April 2025 is a four-year Foreign Income and Gains regime (FIG). If you've been non-UK resident for ten consecutive tax years before you arrive, which Anna comfortably has, you can claim relief on qualifying foreign income and gains for your first four UK-resident tax years. In plain English, for four years a gain on a New Zealand property can potentially sit outside UK Capital Gains Tax altogether.

There's a price, and it's worth seeing the numbers rather than taking my word for it. Claiming FIG for a tax year costs you your UK personal allowance and your Capital Gains Tax annual exemption for that same year.

So let's put Anna's figures on it. Say the rental sells for NZD 900,000 (at an FX rate of 2.3) having cost NZD 450,000 (when the FX rate was 1.9). That's a gain of NZD 450,000, or roughly £154,000.

1. UK CGT on a £154,000 residential property gain, at the higher rate of 24%, comes to about £37,000.
2. Claiming FIG that year, on a UK salary of around £45,000, costs her the £12,570 personal allowance, so roughly £2,500 of extra income tax, plus the £3,000 CGT annual exemption, worth about £720.

Call it £3,200 to shelter a £48,000 bill. I don't think that one needs much deliberation.

We've written more on whether the regime is worth claiming in should you actually use the FIG regime, because it isn't always the right answer, particularly for people with lower gains and ordinary UK salaries.

The Trust

I also want to mention a quick word on the NZ trust. HMRC's instinctive starting position on a foreign trust is that it exists to keep assets out of their reach, and if you're the settlor, the person who put the assets in, that instinct gets stronger. There are rules designed to look straight through the trust and treat what happens inside it as happening to you personally.

What defuses most of that is a proper commercial reason for setting up the trust in the first place, and here it was established long before the UK was ever in the picture. Anna's was set up around ten years ago for asset protection, on advice, for reasons that had nothing to do with tax anywhere. That's the answer, and it's worth having it ready rather than assembling it under pressure in a few years' time.

Ideally you take your NZ Trust nowhere near the UK tax system. Trusts were (still are?) very popular for placing large NZ assets into - but they don't tend to play nicely if you start wandering the world.

While you're testing the water with a short stay in the UK, the practical advice is to leave the thing alone. Don't distribute, don't restructure, don't take money out, don't sell anything inside it without advice first.

Beyond that, the right treatment depends on what your deed actually says, and reading a trust deed properly is a piece of work rather than a chat. We'll happily tell you whether it needs doing.

Practical Steps Before You Fly

1. Count your UK days for the last two tax years. This decides whether you've got a 90-day tie, which decides whether your threshold is 120 days or 90.
2. Map your ties honestly. Family, accommodation, work, 90-day. Two is comfortable, three changes the maths considerably.
3. Don't rent out the home you're keeping, not until you know whether you're staying.
4. Pin down your accommodation dates. That 91-day continuous availability point is easy to trip over without noticing you've done it.
5. Then decide when to sell, rather than whether.

Summary

1. You don't become UK tax resident on the day you arrive. Residence is decided tax year by tax year under the Statutory Residence Test. Having said that, most people DO become UK tax resident on the day they land, but if you are there for a short stay, this is not obviously the case.
2. A new arrival with two UK ties stays non-resident until they cross 120 days in the tax year, which is enough for a genuine trial run. If they do cross the 120 days then UK tax residency starts from the day you land at Heathrow.
3. Keep a home available to you back home and don't rent it out while you're trying the UK on, because the only home test is the easiest one to fall into by accident, and having it in your back pocket gives you more days to 'trial' living in the UK
4. Check your UK days for the previous two tax years before you assume you've only got two ties.
5. If you do become UK resident, the four-year FIG regime may keep a New Zealand property gain out of UK Capital Gains Tax, which means you can choose your moment rather than being rushed into a sale.
6. Property held in a family trust adds a layer that needs the deed reading properly. It's usually manageable, it's just not something to gloss over.

Frequently Asked Questions

Do I become a UK tax resident the day I arrive?

No. Residence is decided for a whole tax year at a time, from 6 April to 5 April, using the Statutory Residence Test. Arriving and starting work doesn't by itself make you resident, although it does start building the ties that eventually will.

How many days can I spend in the UK before I become resident?

It depends on how many ties you have. With two ties as a new arrival, you can spend up to 120 days. With three ties it drops to 90. At 183 days or more you're resident regardless of anything else.

Does taking a UK job automatically make me a UK tax resident?

Not on its own. Working more than three hours on 40 days or more gives you a work tie, which is one of four. There is a separate automatic test for full-time work in the UK across a 365-day period, but a genuine few-month stint usually won't meet it.

Should I rent out my New Zealand home while I'm trying out the UK?

If staying non-resident matters to you, no. Keeping a home available to you overseas, and actually spending time in it during the tax year, is what keeps the automatic "only home" test from applying. The rental income is rarely worth what it can cost you.

Do I have to sell my rental before I leave New Zealand?

Not necessarily, and this is the assumption worth challenging. If you stay non-resident during your trial, the question doesn't arise. If you do become resident, the four-year FIG regime may still shelter the gain. Selling before you go is the simplest answer, but simplest and best aren't always the same thing.

What is the FIG regime and do I qualify?

It's the four-year Foreign Income and Gains regime that replaced the old non-dom rules in April 2025. You qualify if you've been non-UK resident for ten consecutive tax years before becoming resident, which most Kiwis and Aussies moving over for the first time comfortably meet. Claiming it costs you your personal allowance and CGT annual exemption for the year you claim.

Does having my properties in a family trust change things?

It adds complexity, yes. The UK's rules around foreign trusts are not straightforward and the treatment depends on the terms of your particular deed and on whether you're the settlor, a beneficiary, or both. The general advice while you're in the UK is to leave the trust well alone and get the deed reviewed before any sale.

Can you help with the New Zealand side too?

Not directly, we handle the UK side. We can refer you to a partner we use for New Zealand filings, and the usual running order is the NZ return first, with the figures flowing through to your UK Self Assessment 🙂