UK tax planning for Hong Kong residents in 2026 centres on the UK’s new residence-based tax system, which replaced the centuries-old non-dom regime on 6 April 2025. Whether you’re a British expat in Hong Kong, a returning UK resident, or a Hong Kong national with UK assets, your exposure to UK income tax, capital gains tax, and inheritance tax (IHT) now depends primarily on tax residency history rather than domicile. A further major change — the inclusion of unused pension funds within the IHT estate — takes effect from 6 April 2027. This guide breaks down what changed, who is affected, and what practical steps Hong Kong-based individuals should consider.
Why UK Tax Planning Matters For Hong Kong Residents in 2026
Hong Kong’s large British and international communities, along with HNW families holding UK property, pensions, or investment portfolios, have long relied on non-domiciled status to shield foreign income and gains from UK tax. That system no longer exists. The non-dom regime was abolished by the current UK Government and took effect on 6 April 2025, at the same time as the remittance basis of taxation was replaced with a new residence-based taxation system. Anyone with UK tax exposure — including Hong Kong Nationals planning a move to the UK, or UK nationals settled in Hong Kong who retain UK ties — needs to understand the new framework before making decisions about assets, trusts, pensions, or relocation timing.
What Replaced the Non-Dom Regime? The FIG Rules
In place of the Non-Dom Regime, the UK introduced the Long Term Residence (LTR) regime, which is based around being resident in the UK for 10 out of the last 20 years. Any UK-sited assets you have are always in scope for IHT at 40%, but once you become LTR, your estate becomes liable to Inheritance Tax (IHT) on your worldwide assets, so IHT is far-reaching once you become UK LTR.
At the same time as the LTR regime was introduced, a new regime around any Foreign Income and Gains (FIG) that you receive when UK resident also came into effect. Under the FIG regime, you pay income and Capital Gains Taxes on foreign assets once you live there. Relief is available to individuals who have been non-resident in the UK for at least 10 consecutive years prior to their arrival. Qualifying individuals can claim relief from UK tax on non-UK income and gains arising during the first four years of UK tax residence.
For Hong Kong residents considering a return to, or a first move to, the UK, this is a materially different, and time-limited opportunity when compared to the old system:
- Eligibility: At least 10 consecutive years of non-UK residence immediately before arrival.
- Benefit window: Four tax years of relief on foreign income and gains, even where those funds are later brought into the UK.
- After year four: Once the FIG window closes, individuals are taxed on worldwide income and gains as they arise — a “tax cliff” that requires advance planning rather than a reaction after the fact.
FIG relief must be claimed each tax year for it to apply, and it can be claimed in one year but not the next, so ongoing reviews, rather than a one-off decision, are essential for anyone claiming it.
What Happens to Previous Non-Doms?
Hong Kong residents who previously relied on remittance basis planning, or who hold funds accumulated under the old rules, face specific transitional questions:
- Historic income and gains: Foreign income and gains that arose to a remittance basis user before 6 April 2025 will continue to be taxed if remitted to the UK on or after that date, subject to any relief available under the Temporary Repatriation Facility (TRF).
- The TRF window: This facility allows remittances of pre-6 April 2025 foreign income or gains brought into the UK after that date to be taxed at a reduced rate for a limited three-year period.
- Partial eligibility: Individuals who were already UK residents before the change may still benefit from the FIG regime for a limited period, depending on when they first became UK tax residents. Others not eligible on the transition date became liable to tax on worldwide income and gains from 6 April 2025 onward.
UK Inheritance Tax: A Fundamental Shift to Residence
UK Tax Planning in Hong Kong in 2026 centres on this area, which has the greatest long-term impact for Hong Kong-based families with UK-connected wealth or existing trust structures.
Starting 6 April 2025, the UK moved from a domicile-based system to a residence-based system for inheritance tax purposes. Under this framework, an individual is generally treated as a long-term UK resident (LTR) if they have spent 10 of the last 20 tax years as a UK resident, and those years need not be consecutive. There is also a “tail” provision, meaning that, depending on how long you have lived in the UK, your worldwide assets can remain within the UK IHT net for a number of years after you leave.
This changes how long-standing structures — particularly excluded property trusts settled by former non-doms — are treated. Trusts that historically offered enduring protection from UK IHT may lose that protection once the settlor has accumulated sufficient UK residence under the new LTR test, since IHT exposure is no longer tied to domicile.
Unused Pensions and IHT: The April 2027 Change
A further reform, separate from but closely linked to the 2025 changes, directly affects pension planning for anyone with UK-connected retirement savings.
From 6 April 2027, most unused pension funds and pension death benefits will be brought within the value of a deceased person’s estate for UK Inheritance Tax purposes. This ends the long-standing position under which pensions generally sat outside the IHT net, and was designed specifically to remove the use of pensions as an IHT planning vehicle. Personal representatives will become responsible for reporting and paying any IHT due on unused pension funds and death benefits, and scheme administrators will have new duties to support that process, including the ability to withhold up to 50% of a benefit for up to 15 months after the month of death.
Whether this affects a Hong Kong-based individual and how severely depends heavily on long-term UK resident (LTR) status:
- Non-LTR individuals — those who do not meet the 10-out-of-20-year residence test — are only subject to IHT on their UK-based assets. For this group, Qualifying Non-UK Pension Schemes (QNUPS) and similar non-UK-established arrangements should generally remain outside the scope of the new pension IHT charge, as they rely on the excluded property exemption rather than the pension-specific exemption being withdrawn.
- LTR individuals with foreign pension arrangements — including QROPS and QNUPS structures — are the group most exposed, since the statutory exemption currently protecting these schemes is being removed for those who qualify as long-term UK residents.
- UK-established pensions (such as a SIPP) will remain within the scope of UK IHT even for someone who is not a long-term UK resident, because the pension itself is treated as a UK asset regardless of where the individual lives.
For British expats in Hong Kong and other non-LTR individuals with UK pension exposure, this makes QNUPS one of the few remaining structures that can keep pension wealth outside the UK IHT net after April 2027 — provided the individual’s residence position, scheme jurisdiction, and contribution history are correctly aligned. Existing QNUPS arrangements set up years ago under different assumptions should not be treated as still fit for purpose by default; the correct position depends on the member’s residence history, scheme status, and future retirement plans, and should be reviewed rather than assumed.
Practical Steps for Hong Kong-Based Individuals
- Map your UK residency history against both the FIG regime’s 10-consecutive-year test and the LTR test’s 10-out-of-20-year rule — they are not the same measurement.
- Review any UK trust structures against the new residence-based IHT exposure, particularly excluded property trusts set up before 2025.
- Review pension arrangements now, ahead of April 2027 — confirm whether you are likely to be LTR or non-LTR at the relevant time, and whether existing QROPS or QNUPS structures still deliver the protection they were designed for.
- Plan remittance timing carefully if you hold pre-2025 foreign income or gains and may relocate to the UK, given the TRF’s limited window.
- Treat the FIG window as finite — plan for the transition to worldwide taxation well before the four-year period ends.
- Coordinate Hong Kong and UK advice, since cross-border planning between Hong Kong’s tax-neutral environment and the UK’s new residence- and pension-based rules requires advisers familiar with both jurisdictions.
How to Find a Trustworthy UK Tax Adviser from Hong Kong
Given how much these rules have changed, generic advice is one of the biggest risks facing Hong Kong-based individuals right now. When vetting a UK tax adviser, look for:
- Recognised professional qualifications and body membership, such as STEP (Society of Trust and Estate Practitioners), the Chartered Institute of Taxation (CIOT), or ICAEW/ACCA for accountants working across UK tax matters.
- Demonstrated cross-border experience — specifically advisers who work regularly between Hong Kong (or wider Asia) and the UK, rather than a UK-only practice unfamiliar with Hong Kong residency status, employment structures, or local reporting obligations.
- Current, dated guidance. Ask when their advice or materials were last reviewed. Given that the FIG regime, LTR test, and 2027 pension changes were introduced recently, advice written before 2025 should be treated as out of date.
- Clarity on scope. A trustworthy adviser will be upfront about what they can and cannot advise on — for example, distinguishing UK tax advice from Hong Kong tax and regulatory matters, and referring you elsewhere for anything outside their licensed remit.
- No guaranteed outcomes. Be cautious of anyone promising specific tax savings before reviewing your full circumstances; genuine advisers assess your residence history, asset base, and goals before recommending a structure.
At Soteria Trusts, we work alongside Chartered UK tax advisers as part of a coordinated planning team — we don’t provide UK tax advice ourselves, but we do provide the trust and fiduciary structuring, administration, and cross-border coordination that sits alongside it. For Hong Kong-based individuals and families navigating the FIG regime, LTR status, existing trust structures, or QNUPS and pension planning ahead of the April 2027 changes, our role is to help ensure your structures are built and maintained correctly once your UK tax position has been assessed, and that your Hong Kong, Thailand, and UK arrangements remain properly coordinated over time. If you’re reviewing your position, we’re happy to have an initial conversation and connect you with the right specialist advice where needed.
The April 2027 change brings unused pension funds into the IHT estate calculation on death; this is separate from income tax treatment of pension withdrawals during the individual’s lifetime, and both should be considered together in retirement planning.
Not automatically — it depends on whether you meet the long-term UK resident (LTR) test based on UK residence in 10 of the last 20 tax years, and on whether the pension scheme itself is UK-established or non-UK established.
Given the lead time needed to restructure pensions, trusts, or residency plans, early review is strongly advisable rather than waiting until the rules take effect.
For non-LTR individuals, QNUPS structures established outside the UK are expected to remain outside the pension IHT charge, but suitability depends on individual residence history, existing pension arrangements, and long-term plans, so personalised advice is essential before setting one up or restructuring an existing scheme.
That’s exactly what a private estate evaluation is for. Every portfolio’s exposure depends on your residency status, how your assets are currently structured, and which jurisdictions are involved — there’s no generic answer. Soteria Trusts’ cross-border planning team can review your specific holdings, map out where your exposure sits today, and identify which of these structures (or combinations of them) would address it.
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This article provides general information only and does not constitute tax, legal, or financial advice. UK tax rules are complex and continue to evolve; individuals with UK tax exposure should seek advice tailored to their specific circumstances from a qualified UK tax adviser alongside their trust and fiduciary planning team.
