Tax Guide for UK Citizens Living in Japan

UK vs Japan tax residency 英国と日本の税務上の居住地

The single biggest advantage UK citizens have over US citizens when moving to Japan is this: the UK uses residence-based taxation, not citizenship-based taxation. Once you stop being a UK tax resident, the UK generally stops taxing you on your worldwide income. You will only file and pay taxes in Japan.

UK Statutory Residence Test (SRT)

Since April 2013, the UK has used the Statutory Residence Test (SRT) to determine your tax residence status. The SRT consists of a series of tests applied in order:

• Automatic overseas test: You are automatically non-resident if you were UK resident in one or more of the previous 3 tax years and spend fewer than 16 days in the UK in the tax year. If you were not UK resident in any of the previous 3 years, the threshold is fewer than 46 days.
• Automatic UK test: You are automatically UK resident if you spend 183 days or more in the UK in the tax year, or your only home is in the UK, or you work full-time in the UK.
• Sufficient ties test: If neither automatic test is met, the SRT looks at your "ties" to the UK — accommodation, family, work, 90-day presence in prior years, and country ties — combined with days spent in the UK. The more ties you have, the fewer days you need to spend in the UK to be considered resident.

For most UK citizens who move to Japan full-time, the automatic overseas test is met in the first full tax year abroad (April 6 to April 5). In your departure year, you may be able to use "split year treatment" — being treated as UK resident for part of the year and non-resident for the remainder.

Becoming a Japanese tax resident

Japan determines tax residency based on your 住所 (domicile) or 居所 (place of residence). If you have a 住所 in Japan (generally interpreted as living in Japan with the intention to stay for at least 1 year), you are a Japanese tax resident from day one. There is no minimum day count like the UK's SRT — your intention to stay is what matters. (国税庁タックスアンサー No.2010)

Do you still file in the UK? 英国での申告義務

Once you become non-UK-resident, you generally do not need to file a UK Self Assessment tax return — unless you have UK-source income that requires reporting. Situations where you may still need to file include:

• UK rental income: If you own property in the UK and receive rental income, you must file a UK return and pay UK tax on that income (subject to the Non-Resident Landlord Scheme — see the property section below).
• UK self-employment income: If you continue to perform work or provide services in the UK while living in Japan.
• Capital gains on UK property: Non-residents must report and may owe Capital Gains Tax (CGT) on the sale of UK residential property (since April 2015) and all UK property (since April 2019).
• UK pension income: Depending on the treaty and the type of pension, UK pension income may need to be reported in the UK, though the treaty generally allocates taxing rights to Japan as your country of residence.
• Split year of departure: In the tax year you leave the UK, you may need to file a return to report income earned during the UK-resident portion of the year.

If you have no UK-source income and have fully moved to Japan, you can complete HMRC's P85 form ("Leaving the UK") to notify them of your departure. HMRC may then remove you from Self Assessment.

UK-Japan tax treaty 日英租税条約

The UK-Japan tax treaty (formally the Convention between the United Kingdom and Japan for the Avoidance of Double Taxation) is one of the most favorable treaties Japan has signed. The 2013 Protocol updated several provisions to bring rates in line with modern standards.

Key treaty rates for UK nationals:

These are among the best rates in Japan's treaty network — particularly the 0% rates on interest and royalties. The treaty also contains provisions on employment income (183-day rule), pensions, capital gains, and government service income.

Important: Unlike the US-Japan treaty, the UK-Japan treaty does not have a "saving clause" that preserves the right to tax citizens. Since the UK uses residence-based taxation, once you are non-UK-resident, the UK does not claim the right to tax your worldwide income. The treaty's provisions apply cleanly.

ISA vs NISA ISAとNISAの比較

If you are familiar with the UK's ISA (Individual Savings Account), you will find Japan's NISA (少額投資非課税制度) conceptually similar. Both are tax-advantaged investment accounts that shield dividends and capital gains from taxation. Here is how they compare:

What happens to your UK ISA

When you become non-UK-resident, you cannot make new contributions to your ISA. However, your existing ISA investments remain in the ISA wrapper and continue to be shielded from UK tax. The investments can grow, pay dividends, and be reinvested — all within the ISA.

The catch is that while the ISA protects you from UK tax, Japan does not recognize the ISA as a tax-free vehicle. As a Japanese tax resident, you may owe Japanese tax on dividends and capital gains arising within your ISA. In practice, many UK expats in Japan hold their ISA investments and do not actively trade within the account, minimizing taxable events. The treatment of unrealized gains and reinvested dividends depends on your specific situation — consult a tax advisor who understands both systems.

UK pensions while living in Japan 英国の年金制度

UK pensions come in several forms, and each is treated differently when you live in Japan:

State Pension (国家年金)

The UK State Pension is based on your National Insurance (NI) contribution record. You need 35 qualifying years for the full new State Pension (currently £221.20/week for 2024-25). If you have fewer years, you receive a proportional amount (minimum 10 qualifying years to receive anything).

Under the UK-Japan tax treaty, the State Pension is generally taxable only in your country of residence — Japan. You can apply to HMRC for your State Pension to be paid gross (without UK tax deducted) using form DT Individual. You then report and pay tax on the pension income in your Japanese 確定申告.

Important: Unlike some countries, the UK does increase the State Pension annually (by the "triple lock") for recipients living in Japan. Japan has a reciprocal agreement with the UK that ensures pension increases are applied. This is not the case for all countries — UK pensioners in some countries have their pension frozen at the rate when they left.

Workplace pension (企業年金)

If you have a UK workplace pension (defined benefit or defined contribution), it remains in the UK pension scheme. You cannot transfer it to Japan. When you begin drawing the pension, the treaty generally allocates taxing rights to Japan as your country of residence. Contact your pension provider about payment to a Japanese bank account — most large schemes can arrange international transfers.

SIPP (Self-Invested Personal Pension)

A SIPP continues to exist and grow while you live in Japan. You can typically continue managing your SIPP investments from abroad. As with workplace pensions, withdrawals are generally taxable in Japan under the treaty. The 25% tax-free lump sum available under UK rules may still apply for UK tax purposes, but Japan may tax the full withdrawal amount — treaty interpretation varies, so take professional advice on this point.

National Insurance contributions 英国の国民保険

National Insurance (NI) contributions build your entitlement to the UK State Pension and certain other benefits. When you move to Japan, you stop paying mandatory NI contributions. However, you have the option to pay voluntary Class 3 National Insurance contributions to keep building your qualifying years.

Should you pay voluntary NI? This is one of the most important financial decisions for UK citizens abroad. Here is the math:

• Cost: Class 3 voluntary NI contributions are currently £17.45 per week (£907.40 per year for 2024-25). This is remarkably cheap.
• Benefit: Each qualifying year adds approximately 1/35th of the full State Pension — roughly £6.32/week (£328.64/year) in additional pension for life.
• Payback period: At £907.40 per year in contributions for £328.64 per year in additional pension, you break even in about 2.8 years of receiving the pension. Given that the State Pension is paid for life and increases annually, this is one of the best returns available.
• Deadline: You can generally pay voluntary NI for gaps in the last 6 years. However, HMRC has extended deadlines for filling gaps going back to April 2006 — check the current deadline as it may change.

UK-Japan totalization agreement 日英社会保障協定

The UK and Japan have a Social Security Agreement (社会保障協定) that coordinates pension and social insurance between the two countries. This agreement:

• Prevents double contributions: If you are employed in Japan by a Japanese employer, you pay into the Japanese pension system (厚生年金) and are exempt from UK NI on that employment. If you are temporarily posted from a UK employer (for up to 5 years), you can remain in the UK NI system and be exempt from Japanese social insurance.
• Combines contribution periods: If you have pension contribution periods in both countries but do not qualify for benefits in either country alone, the agreement allows you to combine periods. For example, if you have 8 years of UK NI and 7 years of Japanese 厚生年金, you can count both toward the UK's 10-year minimum and Japan's qualifying requirements.

For posted workers: If your UK employer sends you to work in Japan temporarily, your employer can apply for a Certificate of Coverage from HMRC. This certificate, presented to the Japanese pension office, exempts you from Japanese social insurance contributions for up to 5 years.

UK property while living in Japan 英国の不動産

Many UK citizens who move to Japan keep property in the UK — either as an investment or because they plan to return. Here is how UK property is taxed when you live in Japan:

Rental income

Rental income from UK property is taxable in both the UK and Japan, but the treaty and foreign tax credits prevent double taxation:

• UK side: You must register with HMRC's Non-Resident Landlord Scheme (NRLS). Without registration, your letting agent or tenant must withhold 20% basic rate tax from your rent. If you register, you can receive rent gross and file a UK Self Assessment return to pay tax on the net rental profit.
• Japan side: As a Japanese tax resident, you must report your UK rental income on your 確定申告. You can claim a foreign tax credit (外国税額控除) for any UK tax paid on the same income, preventing double taxation.

Selling UK property

Since April 2015, non-UK residents must pay Capital Gains Tax (CGT) on the disposal of UK residential property. Since April 2019, this extends to all UK property and land. You must report the disposal to HMRC within 60 days of completion and pay any CGT due.

As a Japanese tax resident, you must also report the capital gain on your Japanese 確定申告, with a foreign tax credit for UK CGT already paid. Note that Japan and the UK may calculate the gain differently (different cost basis rules, allowable expenses, and inflation adjustments), so the taxable amounts may not be identical.

Frequently asked questions よくある質問

Do I need to tell HMRC I have moved to Japan?

Yes. Complete form P85 (Leaving the UK) to notify HMRC of your departure. This helps ensure your PAYE tax code is updated and you are not sent Self Assessment notices unnecessarily. If you were self-employed, you should also deregister for Self Assessment if you no longer have UK-source income.

Can I keep my UK bank accounts?

Most UK banks allow non-residents to keep existing accounts, though some may restrict certain products (like ISA contributions or credit cards). You should notify your bank of your new address. Some banks may move you to an "international" or "expat" account product. Interest earned on UK bank accounts is not subject to UK tax for non-residents (since 2016) — you only pay Japanese tax on the interest.

What about my UK stocks and shares?

Non-UK-residents are generally not subject to UK CGT on the sale of shares and securities (only UK property triggers non-resident CGT). Your UK share portfolio is therefore taxed only in Japan. You report any dividends and capital gains on your Japanese 確定申告. UK dividend withholding tax does not generally apply (the UK abolished the dividend tax credit and does not withhold on dividends paid to non-residents).

I want to use both NISA and my UK ISA. Is that possible?

Yes, with caveats. You can keep your existing UK ISA (no new contributions while non-UK-resident) and open a NISA in Japan. Your ISA continues to grow free of UK tax, but Japan may tax gains arising within the ISA. Your NISA is entirely tax-free for Japanese purposes and has no UK implications (since you are non-UK-resident). Using both is a reasonable strategy — just be aware of the Japanese tax treatment of your ISA.

Does the UK-Japan treaty affect my NHS entitlement?

The tax treaty does not affect NHS entitlement directly. As a non-UK-resident, you lose free NHS access (except for some exemptions, such as treatment that began before you left). In Japan, you will be covered by either 社会保険 (if employed) or 国民健康保険 (if self-employed or not working). When visiting the UK, you should have travel insurance. If you return to live in the UK, NHS entitlement resumes once you are ordinarily resident.

I am a dual UK-Japanese citizen. Any special considerations?

Your tax obligations are determined by tax residence, not citizenship. As a Japan-resident, you file and pay taxes in Japan on your worldwide income. Your UK citizenship does not create a UK filing obligation (unlike US citizenship). The main consideration is ensuring you clearly establish non-UK-resident status under the SRT, especially in the year you move.