What Happens to Your UK Investments After You Become Resident in India

Nisha had built a solid investment portfolio during her 15 years in London. £180,000 in her Stocks and Shares ISA. £320,000 in her SIPP. Another £45,000 in individual UK stocks through her Hargreaves Lansdown account. 

Now she was moving back to Mumbai and had one burning question: what happens to all of this?

I've guided dozens of clients through exactly this situation. The short answer: your investments don't disappear. But the rules change dramatically.

India will now want its share of your gains. Your ISA's tax-free status? Gone, at least as far as India is concerned. Your broker might restrict your account. 

And if you don't plan carefully, you could face double taxation on the same gains.

Here's what you need to know to protect your wealth.

The Big Picture: How India Taxes Your UK Investments

Once you become an Indian tax resident, your worldwide income becomes taxable in India. This includes gains from UK stocks, dividends from UK companies, and withdrawals from your UK pension.

The transformation happens based on your residential status. If you're present in India for 182+ days in a financial year, you're generally a resident. Your global income is now India's business.

But here's the nuance that changes everything: India has a Double Taxation Avoidance Agreement (DTAA) with the UK. This treaty prevents you from paying tax twice on the same income. The key is knowing which country has the right to tax what.

👉 Tip: Use Belong's Residential Status Calculator to determine your exact tax status for the year you return.

Your UK Stocks and ETFs: The New Tax Reality

What Changes When You Become India Resident

Your UK shares and ETFs continue existing in your broker account. Nothing physical changes. But the tax treatment transforms completely.

As an Indian resident, gains from selling UK stocks are taxable in India as capital gains. The rates depend on how long you held the investment:

The 24-month rule for foreign securities is longer than Indian listed stocks (12 months). Also, the ₹1.25 lakh LTCG exemption under Section 112A doesn't apply to foreign shares. Your entire gain is taxable.

Dividends from UK Companies

UK dividends face a different treatment. Under the India-UK DTAA, the UK can withhold up to 10% tax on dividends paid to India residents. You can claim this as a foreign tax credit when filing your Indian return.

In India, dividends are added to your total income and taxed at your slab rate. But you won't pay the full rate twice. The DTAA credit mechanism ensures you pay the higher of the two countries' rates, not both combined.

The Currency Factor

India taxes the rupee value of your gains. If you bought UK shares when GBP/INR was 95 and sell when it's 105, that currency appreciation becomes part of your taxable gain. This isn't calculated separately. It's automatically included in the rupee conversion of your sale proceeds minus purchase cost.

Your UK Stocks and Shares ISA: The Tax-Free Status Problem

India Doesn't Recognize ISA Tax Benefits

This is the hardest truth for many returning NRIs to accept. Your ISA provided tax-free growth and withdrawals in the UK. India has no equivalent recognition.

To India, your ISA is just another foreign investment account. Gains are taxable. Dividends are taxable. The ISA wrapper provides zero tax protection once you become an Indian resident.

What You Can and Cannot Do with Your ISA

According to UK government rules:

You CAN:

• Keep your ISA open after leaving the UK
• Hold existing investments within it
• Sell and reinvest within the ISA
• Withdraw funds anytime
• Transfer between UK ISA providers

You CANNOT:

• Add new money to your ISA
• Open a new ISA while non-UK resident

You must inform your ISA provider when you become non-UK resident. Most providers allow you to maintain the account but freeze contributions.

The RNOR Opportunity

Here's where strategic planning matters. For 2-3 years after returning, you may qualify as Resident but Not Ordinarily Resident (RNOR). During RNOR status, foreign income (including gains from UK investments) is not taxable in India if not received or brought into India.

Smart Strategy: If you have unrealized gains in your ISA, consider selling during your RNOR years. The gains won't be taxable in India. You can then repurchase at the higher cost basis. When you eventually sell as a full resident, you'll only pay tax on gains from the new purchase date.

One client saved ₹18 lakhs in taxes using this approach with her £95,000 ISA portfolio.

👉 Tip: The RNOR window is limited. Plan your ISA exit strategy before you return, not after.

Your UK SIPP: The Pension Puzzle

SIPPs Can Be Maintained from India

Unlike ISAs, your Self-Invested Personal Pension can often be managed from India. The key question is whether your SIPP provider continues serving non-UK residents. Many do, including providers using Interactive Brokers for execution.

But there are important restrictions:

• You cannot contribute to a SIPP while non-UK resident
• Some SIPP administrators may limit your investment choices
• New SIPP account opening requires UK residency

Tax on SIPP Withdrawals as India Resident

Under Article 20 of the India-UK DTAA, pensions paid to a resident of one country are generally taxable only in that country of residence. This means your SIPP withdrawals may be taxable primarily in India, not the UK.

The process works like this:

1. Apply to HMRC for an NT (No Tax) code
2. UK provider pays your withdrawal without UK tax deduction
3. You declare the income in India and pay tax at your slab rate

A 2025 tribunal case confirmed that SIPP withdrawals by non-UK residents may not be taxable in the UK under the DTAA. This ruling strengthens the case for obtaining NT coding.

The 25% Tax-Free Lump Sum

UK rules allow you to take 25% of your pension tax-free (up to £268,275 under current Lump Sum Allowance rules). This remains tax-free in the UK regardless of your residency.

But India may tax this lump sum as income. The DTAA doesn't specifically exempt lump sum withdrawals. Consult a cross-border tax specialist before taking your tax-free cash after becoming India resident.

SIPP vs QROPS: Should You Transfer?

QROPS (Qualifying Recognised Overseas Pension Schemes) allow transferring UK pensions to approved overseas schemes. For India, approved QROPS providers include HDFC Life, ICICI Prudential, and Tata AIA.

Consider QROPS if:

• Your pension exceeds the UK's Overseas Transfer Allowance (£1,073,100)
• You want to eliminate GBP currency risk
• You're concerned about UK inheritance tax (40% above £325,000)
• You're settling permanently in India

Keep your SIPP if:

• Your pension is under £500,000
• You might return to the UK
• You want continued access to global investments
• Transfer costs are prohibitive

The 25% Overseas Transfer Charge applies if you're not resident in the same country as your QROPS. Since you're transferring to India while becoming India resident, this charge shouldn't apply. But verify with your transfer advisor.

Broker Account Restrictions: What Happens to Your Trading Account

Most UK Brokers Have Non-Resident Policies

When you inform your broker you've moved abroad, their response varies:

Some brokers will close your account entirely. Others restrict it to sell-only mode. A few continue full service.

What to do:

1. Contact your broker 3-6 months before moving
2. Ask specifically about India residents
3. Get their policy in writing
4. If they'll close the account, arrange transfers before moving

Consider Interactive Brokers or Saxo

Both platforms serve India residents and allow holding UK stocks. If your current broker won't serve you after the move, transferring to one of these international platforms keeps your options open.

Interactive Brokers, in particular, operates across multiple jurisdictions. You can hold the same account structure and simply update your residency. They support UK stocks, ETFs, and many other markets.

The Mandatory Disclosure: Schedule FA

Reporting Foreign Assets in India

As an Indian resident, you must declare all foreign assets in Schedule FA (Foreign Assets) of your income tax return. This includes:

• UK brokerage accounts and their value
• UK bank accounts (including those linked to your broker)
• UK properties (if any)
• All foreign shares, ETFs, and funds held

Disclosure is required even if you held the asset for just one day during the calendar year. The reporting period is January 1 to December 31 (not the Indian financial year).

Penalties for non-disclosure are severe:

• Up to ₹10 lakh fine per year of non-disclosure
• Prosecution under the Black Money Act
• Up to 7 years imprisonment for willful evasion

This isn't theoretical. Indian tax authorities actively pursue foreign asset non-disclosure, especially with increasing international information sharing.

👉 Tip: Keep detailed records of all UK investments, including cost basis, purchase dates, and broker statements. You'll need these for accurate disclosure.

DTAA Benefits: How to Avoid Double Taxation

The Credit Method

India uses the credit method for DTAA relief. You pay tax in India on your worldwide income, then claim credit for taxes already paid abroad on the same income.

Example:

• You sell UK shares for a £10,000 gain
• UK withholds £0 (no capital gains tax for non-residents on shares)
• India taxes the gain at 12.5% = ₹1.05 lakh (assuming ₹105/GBP)
• You pay ₹1.05 lakh to India
• No double taxation occurred

For dividends:

• UK dividend of £5,000
• UK withholds 10% = £500 under DTAA
• India taxes at your slab (say 30%) = ₹1.575 lakh
• You claim £500 (₹52,500) as foreign tax credit
• Net India tax = ₹1.575 lakh - ₹52,500 = ₹1.05 lakh

Required Documentation

To claim DTAA benefits, you need:

• Tax Residency Certificate (TRC) from India (apply via Income Tax Department)
• Form 10F submitted to payers in UK/India
• Form 67 filed before your ITR due date
• Proof of foreign tax paid (broker statements, dividend vouchers)

The TRC takes 15-30 days to obtain. Apply early if you expect to claim DTAA benefits.

Strategic Planning: What to Do Before and After Moving

6 Months Before Your Return

1. Review your portfolio gains: Calculate unrealized profits in each holding
2. Check residential status timing: A mid-year return maximizes your RNOR window
3. Contact all brokers: Understand their non-resident policies
4. Obtain UK TRC: If you'll need to claim UK tax relief
5. Download all statements: Get complete transaction history from UK brokers

During RNOR Period (First 2-3 Years)

1. Sell appreciated foreign assets: Gains are not taxable in India during RNOR
2. Repurchase at stepped-up basis: This resets your cost for future calculations
3. Draw from SIPP strategically: Consider withdrawals during RNOR if beneficial
4. Repatriate funds: Move proceeds to India through proper banking channels

After Becoming Fully Resident (ROR)

1. File Schedule FA diligently: Disclose all remaining foreign assets
2. Claim DTAA credits: File Form 67 with every ITR
3. Consider consolidation: Bringing investments to India simplifies compliance
4. Use GIFT City options: Tax-free alternatives for USD investments

A Better Alternative: GIFT City for Foreign Currency Investments

If you're concerned about the tax complexity of holding UK investments as an India resident, consider GIFT City.

GIFT City fixed deposits and Alternative Investment Funds offer:

• Tax-free interest and capital gains for NRIs and RNORs
• USD/foreign currency denomination (no forced conversion to INR)
• Full repatriation without restrictions
• IFSCA regulation (Indian regulator for international finance)

For returning NRIs, this provides a familiar foreign-currency investment structure with Indian regulatory oversight and significant tax benefits.

Compare your options using Belong's NRI FD Comparison Tool to see how GIFT City rates stack against traditional NRE and NRO accounts.

Final Thoughts

Moving your financial life from the UK to India doesn't mean abandoning your investments. But it does mean adapting to a new tax regime. The good news: with proper planning, you can minimize taxes, maintain your portfolio, and avoid compliance headaches.

The RNOR period is your golden window. Use it wisely to restructure holdings with minimal tax impact. After that, disciplined disclosure and DTAA claims keep you compliant.

For those wanting simplicity, consolidating into Indian structures like GIFT City investments eliminates cross-border complexity while preserving foreign currency exposure.

Whatever path you choose, start planning early. The decisions you make in the six months before returning shape your tax position for years to come.

Need help navigating UK investments as you return to India?

Join our NRI WhatsApp Community where we discuss cross-border tax strategies daily. Or download the Belong app to explore tax-efficient investment options in GIFT City.

Sources:

• India-UK DTAA Treaty Text
• GOV.UK - ISAs if you move abroad
• Income Tax India - Schedule FA Guidelines
• Zerodha Varsity - Foreign Stocks Taxation
• Finance Act 2024 - Capital Gains Amendments