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From the United Kingdom to Cyprus

Leaving the UK post non-dom abolition: what 2025/26 changed and why Cyprus is on every shortlist

The 4-year FIG regime replaced the remittance basis on 6 April 2025. Corporation tax is stuck at 25%. Inheritance tax is now residence-based with a 10-year tail. For founders, investors and long-term non-doms, Cyprus is the EU-law route that actually works in 2026.

  • ✓Dividend rate 39.35% (additional) — Cyprus non-doms pay 0% SDC on dividends for 17 years
  • ✓Corporation tax 25% above £250k — Cyprus 15% flat (2026) + IP Box 3% effective
  • ✓Long-term residents face UK IHT at 40% worldwide — Cyprus has no inheritance tax
  • ✓Statutory Residence Test can be broken cleanly with the right split-year case
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United Kingdom vs Cyprus at a glance

All figures verified against primary sources listed at the bottom of the page. Estimates, not legal or tax advice.

What mattersUnited KingdomCyprus
Corporate tax (main rate)25% above £250k profit (26.5% marginal £50k–£250k)15% flat from 2026; IP Box effective ~3%
Top personal income tax45% above £125,140 (Scotland: 48%); effective 60% at £100k–£125k taper35% top marginal; 0% up to €22,000 (2026 reform)
Dividend tax (top rate)39.35% additional rate + £500 allowanceNon-dom: 0% SDC on dividends for 17 years; GESY 2.65% capped at €180k
Employer NIC15% on earnings above £5,000/year (up from 13.8% / £9,100)8.8% Social Insurance on earnings up to €68,904
Non-dom regimeAbolished 6 April 2025; 4-year FIG only (need 10 yrs non-UK first)17 years non-dom, extendable to 22 years free, up to 27 paid
Inheritance tax40% worldwide for long-term residents (10 of last 20 yrs); 3–10 year IHT tail after leavingNo inheritance tax
Days testStatutory Residence Test — automatic UK test at 183 days; sufficient-ties test below183-day rule OR 60-day rule (with Cyprus ties)

Why UK founders are looking at Cyprus in 2026

The non-dom regime is gone — and the replacement is narrow

From 6 April 2025 the remittance basis and deemed-domicile regime were replaced with a residence-based 4-year Foreign Income and Gains (FIG) regime. To qualify, new UK arrivals must have been non-UK resident for the 10 consecutive tax years before arrival — then they get 100% relief on foreign income and gains for 4 tax years, after which worldwide taxation applies. Existing long-term non-doms lost the remittance basis entirely, with a transitional Temporary Repatriation Facility (TRF) letting them designate pre-April-2025 unremitted FIG at 12% (2025/26, 2026/27) or 15% (2027/28). HMRC policy summary.

Inheritance tax became residence-based

From 6 April 2025 the domicile concept no longer drives UK IHT. An individual becomes a long-term resident (LTR) after being UK resident for 10 of the last 20 tax years, and is then subject to UK IHT at 40% on worldwide assets above the frozen £325,000 nil-rate band plus up to £175,000 residence NRB. Leaving the UK triggers an IHT tail of 3–10 years depending on how long you were resident — so even after relocation UK IHT can follow you for a decade. HaysMac analysis.

Corporation tax at 25% and employer NIC at 15%

The main corporation tax rate has been 25% since April 2023 (up from 19%), capped at that level by the government's Corporate Tax Roadmap. From 6 April 2025 employer National Insurance rose to 15% and the threshold dropped from £9,100 to £5,000 — a material hike for any UK company employing staff. HMRC corporation tax rates. Cyprus sits at 15% corporation tax with an ~3% effective rate under IP Box for qualifying software, patents and R&D profits.

Fiscal drag and the 60% taper

The UK personal allowance (£12,570), basic-rate (£37,700) and higher-rate (£125,140) thresholds are frozen until April 2028. Wage inflation keeps pushing earners into higher bands with no nominal rate rise. Between £100,000 and £125,140 the personal-allowance taper produces a 60% effective marginal rate. Cyprus rewrote its PIT bands for 2026 to 0% up to €22,000, 20% to €32,000, 25% to €42,000, 30% to €72,000, 35% thereafter.

Dividend tax at 39.35% destroys owner-manager economics

Take a UK owner-manager distributing £100,000 above the higher-rate threshold: after 25% corporation tax on profits and 39.35% dividend tax on the distribution, the combined rate is approximately 55%. A Cyprus non-dom drawing the same through a 15% Cyprus company pays 15% CIT + 0% SDC on the dividend (non-dom) + GESY 2.65% capped — combined around 17.5%. The gap is the single biggest driver of UK founder relocation.

Leaving United Kingdom: what breaks residency and what follows you

Statutory Residence Test (SRT). You are non-UK resident if you meet one of the automatic overseas tests: fewer than 16 days in the UK in the tax year of departure (if UK-resident in any of the last 3 years); fewer than 46 days (if not resident in any of the last 3 years); or full-time work overseas with fewer than 91 UK days and no more than 30 days of UK work. If neither automatic test is met, the sufficient-ties test applies. Getting the year of departure clean usually requires a split-year case (Case 1 — starting full-time work overseas, Case 3 — ceasing to have a UK home).

Temporary non-residence (5-year rule). Dispose of assets after departure and you escape UK CGT only if you remain non-resident for more than 5 complete UK tax years. Come back within 5 years and gains realised while non-resident are deemed to arise in the year of return and taxed then. This is the single biggest trap for short-term relocations.

UK-situs assets stay taxable. UK land and property remains in the UK CGT net for non-residents (Non-Resident CGT, reported within 60 days). Carried interest, employment-related securities, and certain closely-held company distributions also remain in scope.

Remittance-basis cleanup. Pre-April-2025 unremitted foreign income and gains are still theoretically taxable if remitted to the UK while later UK-resident. The Temporary Repatriation Facility (TRF) is the transitional path to bring them in at 12% (2025/26, 2026/27) or 15% (2027/28). Use it during the window or the rate reverts to the normal rate when remitted.

The IHT tail. Long-term residents face UK IHT at 40% on worldwide assets for 3–10 years after leaving, depending on how long they were UK-resident. Planning for IHT exit has to start before you leave, not after.

The United Kingdom–Cyprus double tax treaty

The UK–Cyprus double tax convention was signed on 22 March 2018 and has been in effect since 2019. Under the treaty, the default withholding rate on dividends paid by a Cyprus company to a UK beneficial owner is 0% (15% applies only where dividends are paid out of income from immovable property). Interest and royalties: 0% withholding both ways on beneficial-owner basis. Pensions (Article 17) are taxable only in the residence state — the rule that lets UK pensions be taxed in Cyprus, where the flat 5% option (over €3,420) or progressive election often produces a materially lower outcome. The tie-breaker clause (Article 4) follows the OECD model: permanent home → centre of vital interests → habitual abode → nationality → mutual agreement. Full treaty text on legislation.gov.uk.

FAQs

I am a long-term UK non-dom. Can I just move to Cyprus and claim non-dom there?
In substance yes, but the mechanics need care. Cyprus non-dom status is available to any individual who has not been Cyprus-domiciled for 17 of the last 20 years (almost all non-Cypriots qualify). Once you become Cyprus tax resident (183-day or 60-day rule) and register non-dom, SDC is 0% on dividends and interest for 17 years. The harder side is the exit from the UK — you need to break UK residency under the SRT, manage the IHT tail, and potentially use the Temporary Repatriation Facility to clean up pre-April-2025 unremitted FIG at the discounted rate.
I am Scottish. The top Scottish rate is 48%. Does Cyprus save me more than an English move?
Yes — Scotland's six-band system runs to 48% on income above £125,140 versus 45% in England/Wales/NI. Dividend rates and corporation tax are UK-wide so those don't change, but the personal-income-tax gap between Scotland and Cyprus (top 35% marginal, 0% up to €22,000) is materially larger than the England–Cyprus gap. The relocation economics work harder for Scottish taxpayers.
How does the UK-Cyprus treaty treat my pension?
Under Article 17 of the 2018 UK-Cyprus DTC, private pensions are taxable only in the country where the recipient is resident. If you become Cyprus tax resident, UK private and occupational pensions are taxed in Cyprus, where you can elect the special 5% flat rate on the portion above €3,420 (Article 20 Cyprus Income Tax Law) or the progressive PIT bands — whichever is lower. Government-service pensions (e.g. civil servant, armed forces) are generally taxable only in the UK, unless the recipient is a Cypriot national and resident, per Article 18.
What about the 5-year temporary non-residence rule on capital gains?
If you dispose of pre-departure UK assets (other than UK land/property) while non-UK resident and return within 5 complete UK tax years, the gains are deemed to arise in your year of return and taxed at that year's rates. This means short-term relocations (<5 years) do not give you UK CGT relief on pre-existing holdings. Plan to stay non-UK resident for at least 5 full tax years, or realise gains after a full 5-year window has passed.
I have a UK limited company. Do I have to liquidate it or can it stay?
Three common paths: (1) Keep the UK company, draw dividends as a Cyprus resident &mdash; but the UK company still pays 25% corporation tax on its profits; (2) Redomicile/restructure via a Cyprus holding, which requires tax and legal planning to avoid UK exit charges; (3) Wind up the UK company and use a Members' Voluntary Liquidation (MVL) with BADR (Business Asset Disposal Relief) at 14% CGT (2025/26), then start fresh in Cyprus. Which is right depends on your business type, holders, and whether ongoing UK operations are necessary.
How long does the whole UK-to-Cyprus process actually take?
A clean relocation generally runs 3&ndash;4 months: 2&ndash;3 weeks to set up a Cyprus tax residence (company registration, registered office, tax registration), 4&ndash;6 weeks for immigration (Yellow Slip for UK citizens post-Brexit is the Pink Slip / Cat F route), 4&ndash;8 weeks for banking, and parallel work on the UK side (SRT split-year case, HMRC notifications, pension/property arrangements). We do all of this under one engagement.

Page last reviewed April 2026. This page provides general estimates only — not legal, tax or financial advice. No solicitor–client relationship is created by reading it. Personal situations depend on family, source of income and timing. Book a free consultation for written advice.

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