If you're considering moving from the United Kingdom to Italy taxes should be near the top of your planning checklist. A relocation between these two countries involves overlapping tax years, different residency rules, and a web of obligations that can catch even the most diligent expat off guard. Whether you're drawn by Italy's culture, climate, or career opportunities, solid expat tax United Kingdom Italy planning will protect your finances and help you avoid costly surprises.

This comprehensive guide walks you through relocation tax planning for the 2025/2026 tax year, covering UK departure rules, Italian tax residency, income tax rates, double taxation relief, and Italy's increasingly popular flat-tax regime for new residents.

Understanding Tax Residency: When Do You Stop Being a UK Taxpayer?

The single most important question in any cross-border move is: Where are you tax resident? Getting this wrong can mean paying full tax in both countries — or accidentally evading tax in one of them.

UK Statutory Residence Test (SRT)

The UK determines your tax residency using the Statutory Residence Test (SRT), which is based on three main tests applied in order:

  1. The Automatic Overseas Test — You are automatically non-resident if you were UK resident in one or more of the previous three tax years and spend fewer than 16 days in the UK during the tax year, or if you were not UK resident in any of the previous three tax years and spend fewer than 46 days in the UK.
  2. The Automatic UK Test — You are automatically UK resident if you spend 183 days or more in the UK, your only home is in the UK, or you work full-time in the UK.
  3. The Sufficient Ties Test — If neither automatic test applies, your residency is determined by a combination of days spent in the UK and the number of "ties" you retain (family, accommodation, work, 90-day, and country ties).

The UK tax year runs from 6 April to 5 April. If you leave the UK partway through a tax year, you may be able to use split-year treatment so that only your UK-period income is taxed in the UK for that year.

Key tip: Keep a detailed record of your days in the UK. Even short visits for work or family can push you over a threshold.

Italian Tax Residency Rules

Italy considers you a tax resident if, for more than 183 days in a calendar year (or 184 in a leap year), you meet any one of the following conditions:

  • You are registered in the Italian civil registry (Anagrafe della Popolazione Residente).
  • You have your habitual abode (domicilio) in Italy — i.e., the centre of your personal and economic interests.
  • You have your residence (residenza) in Italy.

Starting from the 2024 tax year, Italy refined its definition of domicile to focus on "personal and family relationships," aligning more closely with international standards. This change remains in effect for 2025/2026.

Italian tax residents are taxed on their worldwide income. Non-residents are taxed only on Italian-source income.

Italian Income Tax (IRPEF): Rates and Brackets for 2025/2026

Italy's main personal income tax is called IRPEF (Imposta sul Reddito delle Persone Fisiche). For the 2025 tax year, the progressive rates are:

Taxable Income (EUR) Tax Rate
Up to €28,000 23%
€28,001 – €50,000 35%
Over €50,000 43%

In addition to national IRPEF, Italian taxpayers also pay regional surcharges (typically 1.23%–3.33%) and municipal surcharges (up to 0.9%), depending on the region and municipality of residence. This can push the effective top marginal rate above 47%.

Practical Example

If you earn €70,000 of employment income as an Italian tax resident in 2025:

  • First €28,000 × 23% = €6,440
  • Next €22,000 (€28,001–€50,000) × 35% = €7,700
  • Remaining €20,000 (€50,001–€70,000) × 43% = €8,600
  • Total national IRPEF = €22,740
  • Add approximately 2%–4% in regional and municipal surcharges on taxable income.

Use our Italy Income Tax Calculator to estimate your exact liability based on your specific income and region.

UK Tax Obligations After You Leave

Leaving the UK doesn't necessarily mean you're free of UK tax obligations. Several areas require careful attention.

Split-Year Treatment

If you qualify for split-year treatment under the SRT, the tax year is divided into a UK part and an overseas part. During the overseas part, your foreign income and gains are generally outside the scope of UK tax (subject to exceptions for UK-source income).

There are eight possible cases for split-year treatment. The most common for someone relocating abroad are:

  • Case 4 — Starting to have your only home overseas.
  • Case 6 — Ceasing to have a home in the UK.

You must meet specific conditions, including ensuring you don't return to the UK for an extended period in the same tax year.

UK-Source Income

Even as a non-resident, you'll continue to owe UK tax on:

  • UK rental income — Taxed at normal UK rates. You can register for the Non-Resident Landlord Scheme (NRLS) to receive rent gross rather than having 20% withheld by your letting agent.
  • UK pension income — Generally taxable in the UK, though the UK-Italy Double Taxation Agreement may shift the taxing right to Italy in certain cases.
  • UK employment income — Only the portion earned for duties performed in the UK.

Use our United Kingdom Income Tax Calculator to model your remaining UK tax liability for the 2025/2026 tax year.

Capital Gains and Temporary Non-Residence

If you've been UK resident for at least four of the seven tax years before departure, the temporary non-residence rules apply. If you return to the UK within five full tax years, any capital gains realised while abroad may be taxed in the UK on your return. This is a common trap for expats who sell investments or property while overseas.

The UK-Italy Double Taxation Agreement (DTA)

The United Kingdom and Italy have a Double Taxation Agreement (signed in 1988 and amended by protocol) designed to prevent the same income from being taxed in both countries. Understanding how the DTA works is essential for expat tax United Kingdom Italy planning.

Key Provisions of the DTA

  • Employment Income (Article 15): Generally taxed only in the country where the work is performed. If you move to Italy and work there, Italy has the primary taxing right.
  • Pensions (Article 18): Private pensions are generally taxable only in the state of residence (Italy, after your move). UK government pensions (Article 19) remain taxable only in the UK.
  • Rental Income (Article 6): Taxable in the country where the property is located. UK rental income remains subject to UK tax, but Italy may also tax it as part of your worldwide income — with a credit for UK tax paid.
  • Dividends (Article 10): The source country (UK) can withhold up to 15%, and the residence country (Italy) taxes the full amount but gives credit for UK withholding.
  • Interest (Article 11): The source country can withhold up to 10%.
  • Capital Gains (Article 13): Gains on immovable property are taxable where the property is located. Other gains are generally taxable only in the state of residence.

How Tax Credits Work in Practice

If income is taxed in both countries under the DTA, Italy (as your country of residence) will typically grant a foreign tax credit for the UK tax paid, up to the amount of Italian tax due on that income. This prevents full double taxation, though differences in rates and allowances can mean you end up paying the higher of the two countries' rates.

Italy's Flat-Tax Regime for New Residents (Regime dei Nuovi Residenti)

One of the most attractive features for high-net-worth individuals moving from the United Kingdom to Italy is the flat-tax regime under Article 24-bis of the Italian Tax Code (TUIR).

How It Works

  • New tax residents who have been non-resident in Italy for at least nine of the ten preceding tax years can opt to pay a flat substitute tax of €200,000 per year on all foreign-source income.
  • This replaces the normal IRPEF rates on foreign income, regardless of the amount earned.
  • Italian-source income is still taxed under the ordinary IRPEF system.
  • Family members can be included for an additional €25,000 per person per year.
  • The regime lasts for a maximum of 15 years and can be revoked at any time.

Who Benefits?

This regime is most advantageous for individuals with substantial foreign income — for example, UK rental portfolios, overseas investments, foreign pensions, or business income from non-Italian sources. If your foreign income is modest, the flat fee may exceed what you'd pay under normal IRPEF rates.

Important Considerations

  • You must file an election with the Italian tax authorities (Agenzia delle Entrate) in your first Italian tax return or via a specific ruling request.
  • While opted in, you are exempt from reporting foreign financial assets and from Italian inheritance and gift tax on foreign assets.
  • The regime does not affect Italian social security contributions.
  • Recent legislative changes in 2024 doubled the flat tax from €100,000 to €200,000 for new applicants from the 2025 tax year onwards. Existing participants who opted in before 2024 may retain the previous €100,000 threshold.

Common misconception: Many expats assume the flat-tax regime is only for the ultra-wealthy. While the €200,000 threshold is significant, individuals with diversified foreign portfolios generating €500,000+ in annual income can still benefit considerably.

Step-by-Step Relocation Tax Planning Checklist

Effective relocation tax planning requires action both before and after your move. Here's a practical checklist:

Before You Leave the UK

  1. Determine your UK departure date and calculate your expected days in the UK for the tax year to confirm non-residence under the SRT.
  2. Review split-year treatment eligibility — identify which case applies and ensure you meet the conditions.
  3. Assess your UK assets — consider the temporary non-residence rules before selling investments or property.
  4. Notify HMRC — complete form P85 ("Leaving the UK") to inform HMRC of your departure and claim any tax refund due.
  5. Review UK pension arrangements — understand how your state pension and any private pensions will be taxed after the move.
  6. Check National Insurance — consider whether to continue voluntary UK NI contributions (Class 2 or Class 3) to protect your UK State Pension entitlement.

After You Arrive in Italy

  1. Register with your local commune — obtain your codice fiscale (tax identification number) and register in the Anagrafe.
  2. Evaluate the flat-tax regime — if eligible, analyse whether the €200,000 substitute tax is beneficial for your income profile.
  3. Open an Italian bank account — this will be necessary for tax payments and is often required for residency procedures.
  4. Understand Italian tax deadlines — the Italian personal tax return (Modello Redditi PF) is generally due by 30 November of the year following the tax year. The tax year in Italy is the calendar year (1 January – 31 December).
  5. Engage a commercialista — an Italian tax advisor is practically essential for navigating the Italian tax system, especially in your first year.
  6. Report foreign assets — if you don't opt for the flat-tax regime, you must declare foreign financial assets and properties on the Quadro RW of your tax return and may owe IVAFE (tax on foreign financial assets, 0.2%) and IVIE (tax on foreign properties, generally 0.76%).

Frequently Asked Questions

Can I be tax resident in both the UK and Italy at the same time?

Yes, it's possible to meet the residency criteria in both countries simultaneously, especially in the year of your move. In this case, the UK-Italy DTA tie-breaker rules (Article 4) determine which country treats you as resident. The tie-breaker considers, in order: permanent home, centre of vital interests, habitual abode, and nationality.

Will my UK State Pension be taxed in Italy?

Under the DTA, the UK State Pension is generally taxable only in Italy once you become an Italian tax resident. You should inform HMRC so that it is paid gross (without UK tax deducted). If you opt for the flat-tax regime, note that the UK State Pension is typically classified as foreign income and would fall under the €200,000 flat tax.

Do I need to file a tax return in both countries?

In most cases, yes — at least in the year of your move. You'll likely need to file a UK Self Assessment return for the tax year of departure (especially if you have UK-source income or need to claim split-year treatment) and an Italian return for the calendar year in which you become resident.

What about healthcare and social security?

While not strictly a tax issue, social security is closely linked. The UK and Italy coordinate social security under the UK-Italy Social Security Agreement (which replaced the EU framework post-Brexit). If you are employed in Italy, you'll pay Italian social security contributions. If you're self-employed, the rules are more nuanced and depend on where you carry out your activities.

How does Italy tax UK rental income?

As an Italian tax resident, you must declare UK rental income in Italy. The UK will also tax it as UK-source income. To avoid double taxation, Italy grants a tax credit for UK tax paid on the rental income. You should report the gross rental income in the Quadro RL or Quadro RW of your Italian tax return.

Conclusion: Key Takeaways for Your UK-to-Italy Move

Relocating from the United Kingdom to Italy is an exciting life decision, but the tax implications are complex and require proactive planning. Here are the essential takeaways:

  • Timing matters: Plan your move around the UK tax year (6 April – 5 April) and carefully track your days in each country to establish clear non-residence in the UK under the SRT.
  • Understand both systems: The UK uses the SRT for residency; Italy uses a combination of civil registration, domicile, and habitual abode. You could be caught by both.
  • Leverage the DTA: The UK-Italy Double Taxation Agreement prevents most cases of double taxation, but you must understand which country has the primary taxing right for each type of income.
  • Consider the flat-tax regime: If you have significant foreign-source income, Italy's €200,000 flat-tax option could save you substantial amounts — but run the numbers carefully, especially after the 2025 increase.
  • Get professional advice: Engage both a UK-qualified tax advisor and an Italian commercialista, ideally ones with cross-border experience.
  • Use the right tools: Estimate your obligations with our Italy Income Tax Calculator and United Kingdom Income Tax Calculator to compare scenarios before and after your move.

With the right preparation, you can make your transition to la dolce vita as tax-efficient as possible.

This article is for informational purposes only and does not constitute tax advice. Tax laws change frequently; consult a qualified tax professional for advice specific to your situation.