UK bank and building society interest is still UK-source income when you are non-resident, but for 2026/27 the UK tax on it may be limited to nil if you are non-resident for the whole tax year. That is because it counts as "disregarded income" under section 811 of the Income Tax Act 2007, and UK banks generally pay interest without deducting tax. No UK tax would generally arise on the interest under these assumptions, although your other UK income and your country of residence can change the picture.

How the non-resident limit works

Non-residents are taxed in the UK only on UK-source income. Within that, section 811 caps a non-resident's income tax at the total of two amounts:

  • Tax deducted (or treated as deducted) from disregarded income, plus
  • Tax on all other UK income, calculated without personal allowances

HMRC's helpsheet HS300 lists interest from UK banks and building societies, UK dividends, income from unit trusts and National Savings and Investments, and certain other income as disregarded. HMRC's manual says the limit applies only if you are non-resident for the entire tax year; it does not apply in the overseas part of a split year.

The broad position is a comparison. Your tax is worked out in the normal way, with any personal allowance you are entitled to, and then the limited figure is worked out. You pay the lower of the two.

If interest is your only UK income

If your only UK income is bank interest with no tax deducted, the limited figure is generally nil. You would normally have no UK tax to pay on that interest, subject to the full-year condition above.

It is different if you also have income that is not disregarded, such as UK rental profits or a UK employment pension. Then the limited calculation taxes that other income with no personal allowance, and the normal calculation, with a personal allowance, may come out lower. British citizens and EEA nationals living abroad can generally claim the UK personal allowance (£12,570 for 2026/27), so it is worth running both.

Rates and allowances for 2026/27

Where interest is taxed under the normal calculation, the 2026/27 savings rates are 20% (basic), 40% (higher) and 45% (additional). The starting rate for savings (up to £5,000 at 0%, reduced by other taxable income) and the Personal Savings Allowance (£1,000 basic rate, £500 higher rate, nil additional rate) apply in that calculation.

From 6 April 2027 the government plans to raise savings income rates to 22%, 42% and 47%. That matters more to UK residents, but it can affect a non-resident whose normal calculation ends up being used.

What the UK-UAE treaty adds

If you live in the UAE, Article 11 of the 2016 UK-UAE double taxation convention allows interest to be taxed in the country of residence and restricts the UK's right to tax interest beneficially owned by qualifying UAE residents, including individuals, subject to the treaty's conditions. In practice the disregarded income rule may produce a similar result without a treaty claim. In countries such as Spain or Portugal, local rules generally tax residents on worldwide interest, and the relevant treaty decides who has the first right to tax it. Our guide to moving from the UK and the Statutory Residence Test covers residence in more detail.

Illustrative example

Illustrative example only, not a real client.

David is a British citizen living in Dubai and non-resident for all of 2026/27. He earns £30,000 of interest from UK savings accounts with no tax deducted. Assumptions: no other UK income, entitled to the personal allowance, full use of the starting rate band and basic rate Personal Savings Allowance.

  • Normal calculation: £30,000 less the £12,570 personal allowance, £5,000 starting rate band and £1,000 Personal Savings Allowance leaves £11,430 taxed at 20%, which is £2,286.
  • Limited calculation: tax deducted at source on disregarded income was nil, and he has no other UK income, so the figure is nil.

Under these assumptions, David's UK liability on the interest would be nil. If he also had UK rental profit, the comparison would change and would need to be worked through.

Do you still need to file?

GOV.UK lists taxable UK savings interest as one of the reasons a non-resident may need to file a Self Assessment return. If HMRC sends you a notice to file, you must file, even if the limit means no tax is due.

Common mistakes

  • Assuming non-residence takes UK interest completely outside UK tax. The limit is what may remove the bill.
  • Applying the limit in a split year.
  • Ignoring how UK rent or pension income changes the comparison.
  • Overlooking tax on the same interest in your new country of residence.

Talk it through

Where you hold cash, in which currency and in which country, can affect both your tax and your wider plans. A regulated financial adviser can help. Get in touch for a free introduction.

Sources and further reading

Last reviewed: October 2026. Tax year: 2026/27. Jurisdictions covered: UK, UAE. Rates, legislation and guidance change, so recheck before relying on this. Rules can differ between England and Wales, Scotland and Northern Ireland; tax residence is fact-specific; treaty outcomes depend on residence, domicile or nationality provisions; examples are simplified and omit reliefs, costs, exchange rates and anti-avoidance rules. This is general information, not financial, tax or legal advice. Take advice in the relevant country before acting.