Andorra vs UK in 2026: Tax Comparison After the Non-Dom Abolition

Written and reviewed by the Axior Global Advisory Team — Andorra-based tax, corporate and residency advisors.

Andorra vs UK in 2026: Tax Comparison After the Non-Dom Abolition

TL;DR: The gap between Andorra and the UK is now one of the widest in Europe. Andorra caps personal income tax (IRPF) at 10% (first EUR 24,000 exempt), taxes companies at a flat 10%, charges 4.5% IGI, and levies 0% wealth, inheritance, gift and exit taxes — with capital gains falling to 0% on assets held over 10 years. The UK, since abolishing the non-dom regime in April 2025, taxes worldwide income at up to 45%, dividends at up to 39.35%, gains at up to 24%, and estates at 40% inheritance tax — which can now follow you for years after you leave, under the residence-based IHT rules. The UK’s replacement FIG regime shelters foreign income and gains for only the first 4 years of UK residence, and only for genuine new arrivals. For UK residents whose FIG window is closing — or long-term residents facing worldwide IHT — Andorra offers a permanent, low, flat alternative two hours from Barcelona and Toulouse. And the first-ever Andorra–UK double tax treaty entered into force on 22 December 2025 (applying in the UK from April 2026), making a properly sequenced exit cleaner than ever.

Key Facts: Andorra vs UK (2026)

Item Andorra United Kingdom
Top personal income tax 10% (IRPF, Llei 5/2014) 45% (additional rate above GBP 125,140)
Income-tax structure 0% to EUR 24,000; 5% EUR 24–40k; 10% above 20% / 40% / 45%; personal allowance withdrawn above GBP 100,000
Dividend taxation Andorran-source dividends exempt; otherwise max 10% Up to 39.35%
Capital gains tax Max 10%; 0% after 10 years’ holding (property); 0% on <25% shareholdings 18% / 24% main rates
Corporate tax 10% flat (special regimes at 2%) 25% main rate (19% small profits)
VAT 4.5% (IGI) 20%
Wealth tax 0% None (but see IHT)
Inheritance tax 0% 40% above nil-rate bands; residence-based scope since April 2025, with a multi-year “tail” after leaving
Exit tax 0% No general exit tax for individuals
Special expat regime Not needed — low rates apply to everyone FIG regime: foreign income & gains relief for first 4 years only (after 10 years non-resident)
Social security CASS 22% total (15.5% employer / 6.5% employee) Employer NIC 15%; employee NIC 8% + 2%
Tax residency test 183 days / centre of economic interests Statutory Residence Test (day counts + ties)
Double tax treaty between them None in force (Andorra has 22 DTAs; the UK is not among them) —

How Much Tax Would You Save Moving from the UK to Andorra?

A UK additional-rate taxpayer keeps roughly 90% of income in Andorra versus 55% in the UK — before even counting dividend, CGT and IHT differences. Andorra’s IRPF, under Llei 5/2014, exempts the first EUR 24,000, taxes the band to EUR 40,000 at 5%, and everything above at a flat 10%. The UK taxes the same income at 20%, 40%, and 45% above GBP 125,140 — and withdraws the personal allowance entirely above GBP 100,000, creating an effective 60% band between GBP 100,000 and GBP 125,140.

The contrast compounds at every layer. UK dividends bear up to 39.35%; in Andorra, dividends from Andorran companies are exempt for resident individuals and foreign dividends are capped at 10%. UK capital gains are taxed at 18%/24%; Andorran gains are capped at 10%, fall to 0% on real estate held more than 10 years, and are exempt for shareholdings under 25% — see Andorra Capital Gains Tax: When It’s 0%. And where a UK estate faces 40% inheritance tax, Andorra levies 0% on wealth, inheritance and gifts — permanently, for everyone, with no reliefs to engineer (why Andorra has no wealth or inheritance tax).

What Replaced the UK Non-Dom Regime — and Why Is It Driving Departures?

Since 6 April 2025 the remittance basis is gone; the new FIG regime exempts foreign income and gains for only the first 4 years of UK residence — after that, worldwide taxation at full UK rates applies. The Foreign Income and Gains (FIG) regime, per the UK government’s published rules (gov.uk), is available only to individuals arriving after at least 10 consecutive years of non-UK residence. It is generous while it lasts — 100% relief on foreign income and gains — but it is short, and long-standing residents get nothing: former non-doms who had built lives in the UK moved straight onto worldwide taxation.

The sharper change is inheritance tax. IHT scope is now residence-based: once you have been UK-resident for 10 of the last 20 years, your worldwide estate is within the 40% net — and remains so for a “tail” of up to 10 years after you leave, depending on length of residence. For internationally mobile families, this converted a manageable planning point into a hard deadline: the longer you stay, the longer the tail. This is the single biggest driver of the HNWI departures the UK has seen since 2025, and it rewards leaving earlier rather than later. Our UK non-dom to Andorra relocation guide covers the mechanics of the move itself.

How Do the Two Systems Treat Business Owners?

An Andorran owner-operator pays roughly 10% total on distributed profits; a UK owner can pay close to 50% once corporation tax and dividend tax stack. A UK company pays corporation tax at 25% (19% on small profits), and the shareholder then pays up to 39.35% dividend tax on distribution — a combined effective burden approaching half of profits at the top end. Employer National Insurance at 15% adds to payroll costs.

An Andorran company pays a flat 10% (as low as 2% in qualifying special regimes), and dividends to Andorran-resident shareholders are exempt from IRPF — so distributed profits bear roughly 10% in total. IGI at 4.5% versus UK VAT at 20% widens the gap on consumption, and CASS at 22% total compares favourably with combined UK NICs for most salary levels. Full detail in Andorra Corporate Tax: the 10% Flat Rate Explained and our company formation guide.

Is There a Double Tax Treaty Between Andorra and the UK?

Yes — the first-ever Andorra–UK double tax convention, signed in London on 20 February 2025, entered into force on 22 December 2025. It applies in the UK from 6 April 2026 for income and capital gains tax, provides 0% withholding on dividends, interest and royalties, and includes a residence tie-breaker — but a UK exit to Andorra must still be sequenced carefully under the Statutory Residence Test. Andorra’s network stands at 22 treaties (Spain, France, Portugal, Luxembourg, the UAE, Malta and others; the newest, with Estonia, entered into force on 24 March 2026 — see Andorra–Estonia DTA: the Network Reaches 22). The UK is not yet among them.

In practice this matters less than it sounds for a clean break — once you are non-UK-resident under the Statutory Residence Test, the UK generally taxes only UK-source income, and Andorra’s own rates on that residual exposure are low — but it matters greatly for the transition years: split-year treatment, temporary non-residence rules (which can claw back gains realised within 5 years if you return), ongoing UK rental income, and the IHT tail all need planning without treaty protection to fall back on. This is precisely where professional sequencing of the departure date, asset disposals and residency application pays for itself.

What Does Andorran Residency Require for a UK Leaver?

Two main routes: passive residency at EUR 1,000,000 investment, or active residency built on running an Andorran company — plus real presence in the Principality. Under Law 2/2026 (the Omnibus 2 law, in force 13 February 2026, published in the BOPA), passive residency requires a minimum EUR 1,000,000 investment in Andorran assets (an alternative allocates EUR 400,000 to the national Housing Fund), plus a EUR 50,000 non-refundable state contribution to the AFA and EUR 12,000 per dependant. Property purchases attract the IEI foreign-investment tax at 6% on a first home (10% on additional ones), with the entry-level qualifying property threshold at EUR 800,000 — see Buying Property in Andorra.

Entrepreneurs typically prefer active (self-employed) residency via an Andorran company — no seven-figure investment required. Andorran tax residency itself follows the familiar 183-day and centre-of-interests tests (the 183-day rule explained); UK leavers must simultaneously manage their UK day counts and ties under the Statutory Residence Test to make non-residence stick.

Andorra vs UK: Who Should Move — and Who Shouldn’t?

Move if your wealth is portable and your FIG window is closed or closing; stay if your income is UK-source-heavy and you’re within a well-used 4-year FIG period. The strongest candidates for Andorra are business owners who can operate remotely or re-domicile their company, investors living off portfolios (0% wealth tax, capped gains, exempt Andorran dividends), and families staring down the residence-based IHT tail — for them, the 40%-vs-0% inheritance gap dwarfs every other number in this article. Recent arrivals to the UK still inside the 4-year FIG window, or professionals whose income is inseparably UK-based (and who would keep paying UK tax at source anyway), have less to gain immediately — though the IHT clock argues for deciding before year 10 of residence.

Lifestyle-wise, Andorra offers Pyrenean quality of life, top-tier safety and healthcare, and a 2–3 hour drive to Barcelona or Toulouse airports — a different proposition from London, which is precisely the point for most movers. For how Andorra stacks up against other UK-exit destinations, see Andorra vs Portugal (after NHR), Andorra vs Dubai and Andorra vs Switzerland.

Frequently Asked Questions

Is Andorra better than the UK for taxes?
On rates, overwhelmingly: 10% vs 45% top income tax, 0% vs 40% inheritance tax, max 10% vs 24% capital gains, 4.5% vs 20% VAT. The real question is transition cost and lifestyle fit, not the arithmetic.

Can I keep my UK company and live in Andorra?
Yes, but with care: the company stays subject to 25% UK corporation tax, and if central management moves with you, dual-residence questions arise — without a UK–Andorra treaty tie-breaker to resolve them. Many owners re-structure via an Andorran company instead; take advice before moving the mind and management of a UK company.

Does the UK inheritance tax really follow me to Andorra?
It can. Under the residence-based rules in force since April 2025, long-term UK residents (10 of the last 20 years) remain within worldwide IHT scope for a tail of up to 10 years after departure. UK-situs assets (UK property, most UK shares) remain within scope regardless. The earlier you leave, the shorter the tail — timing is the planning lever.

How long do I need to stay in Andorra to be tax resident?
The standard tests are 183+ days in the calendar year or having your centre of economic interests in Andorra. Passive residents have a lower minimum-stay requirement for immigration purposes, but tax residency — and escaping UK residence under the Statutory Residence Test — turns on where you actually live. See the 183-day rule.

Is there an exit tax when leaving the UK?
The UK has no general exit tax on individuals. But temporary non-residence rules can tax gains realised while away if you resume UK residence within 5 years, and the IHT tail applies separately. Andorra, for its part, has no exit tax at all.

What does Andorran residency cost compared with what I’d save?
Passive residency: EUR 1,000,000 invested (an asset swap, not a cost), plus the EUR 50,000 non-refundable AFA contribution and EUR 12,000 per dependant. Active residency via a company costs far less upfront. For a UK additional-rate taxpayer on GBP 500,000+ a year, annual savings routinely exceed the one-off costs within the first year — run your own numbers with the calculator below.

Model Your Own Andorra vs UK Numbers

Whether the move makes sense comes down to your mix of salary, dividends, gains and estate exposure — and how many years of UK residence are already on your clock. Use our Tax Savings Calculator to compare your projected annual tax in Andorra versus the UK, then book a free consultation with Axior Global to sequence the exit properly — SRT planning, disposal timing and the residency application together.

Sources

Related Axior guides: UK Non-Dom to Andorra Relocation Guide · Passive Residency · Andorra vs Switzerland · Andorra vs Portugal · Andorra Law & Tax Changes in 2026 (pillar hub).

This article is for general information only and does not constitute tax or legal advice. Andorran figures reflect law as of August 2026; UK figures reflect rules in force for the 2026/27 tax year as published by HM Government. Confirm details for your circumstances before acting.

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