If you're considering moving from the United Kingdom to Italy taxes are likely near the top of your to-do list—and rightly so. Relocating between two countries with complex tax systems requires careful planning to avoid paying more than you owe, missing critical deadlines, or falling foul of residency rules on either side of the English Channel.

This expat tax United Kingdom Italy guide walks you through everything you need to know for the 2025/2026 tax year: UK departure obligations, Italian tax residency rules, income tax rates, the UK–Italy double taxation agreement, and practical steps for relocation tax planning that could save you thousands.

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

The first and most consequential question in any cross-border move is: where are you tax resident? Getting this wrong can mean being taxed on your worldwide income in both countries simultaneously.

UK Statutory Residence Test (SRT)

The UK uses the Statutory Residence Test to determine your tax residency status. For the 2025/2026 tax year (6 April 2025 – 5 April 2026), the SRT evaluates three tests in order:

  1. Automatic Overseas Test – You are automatically non-resident if you:

    • Were UK resident in none of the previous three tax years and spend fewer than 46 days in the UK, or
    • Were UK resident in one or more of the previous three tax years and spend fewer than 16 days in the UK, or
    • Work full-time overseas with fewer than 91 days in the UK (and no more than 30 working days in the UK).

  2. Automatic UK Test – You are automatically UK resident if you spend 183 or more days in the UK, or your only home is in the UK, or you work full-time in the UK.

  3. Sufficient Ties Test – If neither automatic test applies, HMRC counts your "connecting factors" (family, accommodation, work, 90-day presence, and country ties) against the number of days you spend in the UK.

Key takeaway: Simply moving to Italy does not automatically end your UK tax residency. You need to actively manage your day count and ties to the UK.

Split-Year Treatment

If you leave the UK part-way through a tax year, you may qualify for split-year treatment. This means:

  • The portion of the year before your departure is taxed as if you were UK resident.
  • The portion after departure is treated as if you were non-resident (so only UK-source income is taxable).

Split-year treatment is not automatic—you must meet one of the specific cases outlined in the SRT legislation, such as Case 4 (starting full-time work overseas) or Case 6 (ceasing to have a UK home).

Italian Tax Residency Rules for 2025/2026

Italy's residency rules changed significantly with the 2024 tax reform (Legislative Decree No. 209/2023), and these updated rules remain in force for 2025/2026.

Who Is Tax Resident in Italy?

Under the reformed rules, you are considered an Italian tax resident if, for the greater part of the tax year (more than 183 days, or 184 in a leap year), you meet any one of the following criteria:

  • Civil registry (anagrafe): You are registered with an Italian municipality.
  • Domicile: Italy is the place where your personal and family relationships are primarily developed (updated from the old Civil Code definition).
  • Physical presence: You are physically present in Italy, including days of partial presence.
  • Tax residence by treaty: Under the UK–Italy tax treaty tie-breaker rules, you are deemed an Italian resident.

Important change: Under the pre-2024 rules, the domicile test focused on the centre of business interests. The new definition emphasises personal and family ties, which can catch expats off guard—especially those moving with a spouse or children.

Once Italian tax resident, you are subject to Italian tax on your worldwide income.

Registering Your Residency

When you move to Italy, you are legally required to register with the Anagrafe (civil registry) of your local Comune within 20 days of arrival. For EU/EEA nationals (and, post-Brexit, UK nationals with a valid visa), you must also apply for residency at the local Questura if required. Registration in the Anagrafe is one of the triggers for Italian tax residency, so the date matters.

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

Italy's main personal income tax is the Imposta sul Reddito delle Persone Fisiche (IRPEF). For 2025, the three-bracket structure introduced in 2024 continues:

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

On top of IRPEF, you should budget for:

  • Regional surtax (addizionale regionale): Varies by region, typically 1.23%–3.33%.
  • Municipal surtax (addizionale comunale): Varies by municipality, typically 0%–0.9%.
  • Social contributions: If employed in Italy, approximately 9.19%–10.49% of gross salary is deducted as the employee's share.

Practical Example

If you earn EUR 60,000 in gross employment income in Italy in 2025/2026, your IRPEF calculation would be:

  1. First €28,000 × 23% = €6,440
  2. Next €22,000 (€28,001–€50,000) × 35% = €7,700
  3. Remaining €10,000 (€50,001–€60,000) × 43% = €4,300
  4. Total IRPEF = €18,440

Adding typical regional (1.73%) and municipal (0.8%) surtaxes brings the total closer to approximately €19,958 before any deductions or credits.

Use our Italy Income Tax Calculator to model your specific scenario with precision.

Comparing UK and Italian Tax Burdens

Understanding how Italian taxes compare to what you currently pay in the UK is essential for relocation tax planning.

UK Income Tax Rates 2025/2026

For the UK 2025/2026 tax year:

Band Taxable Income (GBP) Rate
Personal Allowance Up to £12,570 0%
Basic Rate £12,571 – £50,270 20%
Higher Rate £50,271 – £125,140 40%
Additional Rate Over £125,140 45%

UK employees also pay National Insurance Contributions (NICs) at 8% on earnings between £12,570 and £50,270, and 2% above that threshold.

Use our United Kingdom Income Tax Calculator to compare your current UK liability.

Side-by-Side Snapshot

For someone earning the equivalent of £50,000 / ~EUR 58,000:

  • UK: Approximately £7,460 income tax + £3,000 NICs = ~£10,460
  • Italy: Approximately €17,700 IRPEF + €1,500 regional/municipal surtax = **€19,200** (before deductions and credits)

Italy's headline tax burden is noticeably higher for mid-range earners. However, Italy offers generous deductions (deduzioni) and tax credits (detrazioni) for employment income, family dependants, medical expenses, mortgage interest, and more—which can significantly reduce the effective rate.

The UK–Italy Double Taxation Agreement

The United Kingdom and Italy have a Double Taxation Convention (DTC) that has been in force since 1990 (with a subsequent amending protocol). This treaty is critical for expats because it provides:

Relief from Double Taxation

  • Employment income: Generally taxed only in the country where the work is performed. If you relocate to Italy and work there, Italy has primary taxing rights.
  • Pensions: UK state pensions are generally taxable only in the country of residence (Italy, once you move). UK private/occupational pensions are typically taxable only in Italy under the treaty, although some specific government service pensions (e.g., civil service, NHS) may remain taxable only in the UK.
  • Rental income: UK rental property income remains taxable in the UK, but Italy can also tax it as part of your worldwide income. Italy provides a credit for UK tax paid.
  • Capital gains: Gains on UK real property remain taxable in the UK. Gains on shares and other assets are generally taxable only in the country of residence.
  • Interest and dividends: Reduced withholding rates apply (typically 10%–15% depending on the income type).

Tie-Breaker Rules (Article 4)

If both countries consider you a tax resident, the treaty's tie-breaker rules determine which country has primary taxing rights, based on:

  1. Permanent home
  2. Centre of vital interests
  3. Habitual abode
  4. Nationality
  5. Mutual agreement between tax authorities

Common mistake: Assuming the treaty automatically prevents double taxation. You must actively claim treaty relief—in Italy, this is typically done through your annual tax return (Modello Redditi or Modello 730), and in the UK, via form DT-Individual or your Self Assessment return.

Special Italian Tax Regimes for Expats

Italy has introduced several attractive tax regimes designed to lure skilled workers and high-net-worth individuals. Understanding these could dramatically change your relocation tax planning.

Regime Impatriati (Inbound Workers Regime) – Updated Rules

The regime impatriati provides a significant income tax reduction for individuals who transfer their tax residence to Italy. Following the 2024 reform, the rules for those becoming Italian tax resident from 1 January 2024 onwards are:

  • 50% exemption on qualifying employment or self-employment income, up to a cap of EUR 600,000 per year.
  • Available for 5 tax years (no longer extendable to 10 years for those qualifying under the new rules).
  • Eligibility requirements:
    • You must not have been Italian tax resident in the previous three tax years (or the previous six/seven years if you previously worked for the same employer or group).
    • You must commit to being Italian tax resident for at least four years.
    • You must perform the majority of your work in Italy.
    • You must hold a university degree or equivalent qualification (or meet other specific criteria).

Example: If you qualify for the regime impatriati and earn EUR 80,000 in Italy, only EUR 40,000 is subject to IRPEF. Your approximate IRPEF bill drops from ~€25,040 to ~€10,900—a saving of over €14,000 per year.

Flat Tax Regime for High-Net-Worth Individuals

Italy's regime forfettario per neo-residenti (Article 24-bis TUIR) offers a flat annual substitute tax of EUR 200,000 on all non-Italian-source worldwide income for individuals who transfer their tax residence to Italy and have not been Italian resident in at least nine of the previous ten tax years.

  • Italian-source income is taxed normally under IRPEF.
  • The regime is available for up to 15 years.
  • Family members can join for an additional EUR 25,000 each per year.

This regime is primarily attractive for wealthy individuals with substantial investment income, foreign pensions, or foreign business income.

Flat Tax on Foreign Pensions

Retirees relocating to specific municipalities in Southern Italy (regions such as Sicily, Calabria, Sardinia, Campania, Basilicata, Abruzzo, Molise, and Puglia) with fewer than 20,000 inhabitants may qualify for a 7% flat substitute tax on all foreign-source income for up to 10 years. This can be exceptionally beneficial for UK retirees receiving private pensions.

Step-by-Step Relocation Tax Planning Checklist

To ensure a smooth transition from the UK to Italy, follow these practical steps:

  1. Determine your departure date carefully. Align your move with the UK tax year (starting 6 April) and the Italian calendar tax year (1 January – 31 December) to optimise split-year treatment and residency.

  2. Notify HMRC. Complete form P85 ("Leaving the UK") to inform HMRC of your departure. If you file Self Assessment, you'll need to complete a return for the year of departure.

  3. Register in Italy. Enrol in the Anagrafe of your new municipality and obtain your codice fiscale (Italian tax ID) if you don't already have one.

  4. Apply for special regimes early. If eligible for the regime impatriati or other regimes, elect into them in your first Italian tax return or inform your Italian employer so they can apply the benefit at source.

  5. Review your UK income sources. Identify UK rental income, pensions, dividends, and interest that may still be taxable in the UK, and understand how the DTC provides relief.

  6. Manage your UK property. If you retain UK property, register with HMRC's Non-Resident Landlord Scheme and declare the income in Italy, claiming a tax credit.

  7. Address National Insurance / social security. Determine where you'll pay social security contributions. Under the UK–Italy social security agreement, you generally contribute only in the country where you work.

  8. Consider capital gains timing. If you plan to sell UK shares or assets, consider whether doing so before or after establishing Italian residency is more tax-efficient. Italy taxes capital gains at 26% (on most financial assets), while the UK has annual exempt amounts and potentially lower rates.

  9. Update your will and estate planning. Italian succession law (successione) applies different rules and forced heirship provisions that may affect your estate.

  10. Engage professional advisors. Work with a UK-qualified tax advisor and an Italian commercialista (accountant) who understands cross-border issues.

Frequently Asked Questions

Do I need to file a tax return in both the UK and Italy?

Possibly, yes. In the year of your move, you will likely need to file a UK Self Assessment return (covering income up to your departure) and an Italian tax return (covering income from the date you become Italian tax resident, or for the full year if you're resident for the majority of it). In subsequent years, you may still need to file in the UK if you have UK-source income above certain thresholds.

Will my UK state pension be taxed in Italy?

Under the UK–Italy DTC, UK state pension is generally taxable only in Italy once you become an Italian tax resident. You should complete HMRC form DT-Individual to request exemption from UK tax on the pension.

Can I keep my UK ISA tax-free status in Italy?

No. Italy does not recognise UK ISAs as tax-exempt. Once you are Italian tax resident, the income and gains within your ISA are subject to Italian taxation, and you must declare the ISA on your Italian tax return (including the Quadro RW for foreign financial assets). You may also owe Italy's IVAFE (Imposta sul valore delle attività finanziarie detenute all'estero) at 0.2% of the market value.

What is the Italian tax year?

The Italian tax year runs from 1 January to 31 December. Tax returns are typically due by 30 November of the following year (for Modello Redditi) or 30 September (for Modello 730 filed through an employer or CAF).

How does Brexit affect my move?

Brexit means UK nationals no longer have automatic freedom of movement. You will need a visa or residence permit to live and work in Italy. However, the UK–Italy double taxation treaty and social security agreements remain in force and are unaffected by Brexit.

Conclusion: Plan Early, Save More

Relocating from the United Kingdom to Italy can be a life-changing experience—culturally, personally, and financially. But without proper relocation tax planning, you risk paying tax unnecessarily in both countries, missing out on Italy's generous expat incentives, or triggering unexpected liabilities.

Here are your key takeaways:

  • Manage your UK departure carefully using the Statutory Residence Test and split-year treatment.
  • Understand Italian residency triggers, especially the updated domicile definition.
  • Italian tax rates are generally higher than UK rates for mid-range earners, but deductions and special regimes can close the gap significantly.
  • The UK–Italy double taxation agreement prevents most double taxation, but you must actively claim relief.
  • Explore Italy's expat-friendly regimes, particularly the regime impatriati (50% income exemption) and the flat tax options for retirees or high-net-worth individuals.
  • Use the right tools: Estimate your Italian liability with our Italy Income Tax Calculator and compare it against your current UK position using our United Kingdom Income Tax Calculator.

Start your planning at least six months before your intended move. Engage qualified advisors in both countries, and keep meticulous records of your travel days, income sources, and tax filings.

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.