Israeli taxes for Brits: leaving HMRC behind, the UK–Israel treaty and your State Pension

Move to Tel Aviv and Israel taxes you on your worldwide income, but HMRC only lets go when the UK rules say so. The good news: a treaty sorts out most of the overlap, and your State Pension keeps rising.

The short version

• Israeli residents pay income tax on their worldwide income, on a calendar tax year, at rates from 10% to 47%, plus a 3% surtax at the very top [6]. National Insurance and health insurance (Bituach Leumi) come on top [8].
• Leaving the UK tax system is down to the Statutory Residence Test, not your Israeli visa or ID card. Tell HMRC with a P85 or the SA109 pages of a return.
• The 1962 UK–Israel double taxation convention, updated by a 2019 protocol that has applied in the UK since April 2020, decides who taxes what [2][3].
• Israel is on the DWP's list of countries where the State Pension is uprated every year, thanks to the UK–Israel social security agreement [4].
• New immigrants and some returning residents get big Israeli tax breaks; our separate guide covers those in detail.

How Israel taxes residents

Israel decides residence by your centre of life: where your home, family, work and social ties are. Two day-counting presumptions help: you're presumed resident if you spend 183 days or more in Israel in a tax year, or 30 days or more in the year and 425 days or more across that year and the two before it. Either you or the tax officer can rebut them [7]. Residents are taxed on worldwide income; non-residents only on Israeli income [6].

The 2026 income tax brackets for individuals, as summarised by PwC, are below [6]. We couldn't open the Israel Tax Authority's own table to confirm them, and the bands have been frozen or reshaped rather than raised with inflation in recent years, so treat them as a guide and check the Authority's figures each January.

Source: PwC Worldwide Tax Summaries, Israel, reviewed 29 June 2026 [6].

Instead of a Personal Allowance, Israel uses credit points (nekudot zikui) knocked off your tax bill. Every resident gets at least 2.25, with extra points for children, single parents and new immigrants. A point is worth somewhere around ILS 235 to 245 a month in 2026 (roughly £55), depending on whose summary you read [6][10], so the basic 2.25 points take something over ILS 500 (about £120) a month off an employee's tax. Your payslip or the Israel Tax Authority will show the exact value.

The other differences from life back home in the UK:

Employees are mostly taxed through payroll, a bit like PAYE. If you have foreign income, rental income or self-employment, expect to file an annual return; the first deadline is 30 April of the following year [10].

Bituach Leumi

From January 2026, employees pay a combined national and health insurance rate of 4.27% on monthly pay up to ILS 7,703 (about £1,785), and 12.17% on the part above it, up to a ceiling of ILS 51,910 (about £12,030) a month [8]. Self-employed people and residents who don't work pay on different scales. Joining a health fund (kupat holim) comes with paying in, so this is your NHS equivalent as well as your National Insurance.

Leaving the UK tax system properly

The UK taxes by residence, not citizenship, and an Israeli teudat zehut doesn't end UK residence on its own. The Statutory Residence Test does, one tax year at a time.

1. Check the automatic overseas tests. Moving for a full-time job? The third test (full-time work abroad, fewer than 91 days in the UK and fewer than 31 UK working days) is the usual one. See the Statutory Residence Test explained.
2. Look at split-year treatment for the tax year you go, so income after the move falls outside UK tax. Our split-year guide explains the cases.
3. Tell HMRC. Use the P85 if you were employed and won't do a Self Assessment return; otherwise report the move on your return with the SA109 residence pages. See telling HMRC with the P85.
4. File the right way. Non-residents post an SA100 and SA109 (deadline 31 October), use software that supports the SA109, or use an agent [5].

Israel's tax year doesn't line up with the UK's, so the year you move straddles two UK tax years and one Israeli one. It's a bit of a faff, but keep your flight records and payslips and it all reconciles.

The UK–Israel double taxation convention

The convention dates from 1962 and came into force on 13 February 1963. It was amended in 1970 and by a protocol signed on 17 January 2019, which has had effect in the UK from 6 April 2020 for income tax and capital gains tax [3]. It's older and shorter than most modern treaties, and the article numbers are Roman numerals.

Source: the 1962 UK–Israel convention as amended by the 1970 and 2019 protocols [2].

Tie-breaker. If both countries treat you as resident, the convention looks first at where you have a permanent home available, then your centre of vital interests, your habitual abode and finally nationality [2]. Hanging on to the family semi in Leeds "just in case" can tip the scales.

How the relief works. Where the UK taxes income that Israel also taxes, Israel deducts the UK tax from the Israeli tax on that income, capped at the Israeli tax due [2].

Pensions. Article XI says pensions "paid to an individual who is a resident of one of the territories, shall be taxable only in that territory" [2]. For a UK workplace or private pension, that means Israel, once HMRC has accepted a treaty claim so your provider stops deducting UK tax. Government pensions (civil service, forces, some teachers' and NHS schemes) fall under a separate article, X, whose effect depends on where you're ordinarily resident [2], so get those checked. A tax adviser who knows both countries can look at your case before you draw anything. Never move a UK pension to an overseas scheme without regulated financial advice; see our guide to UK pensions abroad and the transfer warnings.

One quirk. Article XXIA(2) limits UK relief where the other country taxes only income "remitted to or received in" it [2]. Israel doesn't use a remittance basis for ordinary residents, but if you're on the new-immigrant exemptions, ask your adviser how HMRC sees it.

Your UK State Pension in Israel: uprated

This is where Israel beats Australia, Canada and South Africa. The UK has a social security agreement with Israel, and Israel appears on the DWP's list of countries where "you will usually get an increase in your pension every year" [4]. The full new State Pension is £241.30 a week [1], and someone living in Ramat Aviv gets the April rise just as they would in Romford.

• Claiming. Contact the International Pension Centre or send the international claim form, within 4 months of reaching State Pension age [1].
• Payment. Every 4 or 13 weeks, into a UK account or an Israeli one. Payments into an overseas account carry a 0.39% conversion charge [1].
• Tax. Non-residents don't usually pay UK tax on the State Pension [5]. Under the treaty, Israel is the country that can tax it, unless an immigrant exemption applies.

You can fill gaps in your UK record with voluntary National Insurance from abroad.

Other UK income that follows you

• UK rent. Still taxable in the UK. Register with the Non-Resident Landlord Scheme (form NRL1) so the rent can be paid gross, and file a UK return [5]. Israel also expects it on your return as foreign rental income, generally at a flat 15%, with credit for UK tax [9].
• Savings and ISAs. You can keep an ISA but can't pay in once non-resident; see ISAs when you move abroad.
• Your Personal Allowance. British citizens keep it as non-residents, so modest UK income may be covered [5].

Tax is the topic that never goes quiet in our community group for Brits in Israel, especially around the April return deadline. New immigrants should also read our guide to tax benefits for new immigrants and returning residents, because the ten-year exemption changes the picture a lot.

Pound conversions use the Bank of England spot rate of 5 November 2026 (£1 = ILS 4.3162). Tax is general information, not advice.

Sources

1. GOV.UK: State Pension if you retire abroad and The new State Pension: what you'll get
2. GOV.UK (HMRC): 1962 UK–Israel Double Taxation Convention as amended by the 1970 and 2019 Protocols
3. GOV.UK (HMRC): Israel tax treaties
4. GOV.UK (DWP): Countries where we pay an annual increase in the State Pension (updated 27 October 2026)
5. GOV.UK: Tax on your UK income if you live abroad
6. PwC Worldwide Tax Summaries: Israel, taxes on personal income and other tax credits (reviewed 29 June 2026)
7. PwC Worldwide Tax Summaries: Israel, residence (reviewed 29 June 2026)
8. Bituach Leumi (National Insurance Institute): Rates for salaried workers, from 1 January 2026
9. PwC Worldwide Tax Summaries: Israel, income determination (reviewed 29 June 2026)
10. Nefesh B'Nefesh: Taxation in Israel, general information (updated 17 June 2026)

Keep reading

• Tax benefits for new immigrants and returning residents in Israel
• Banking in Israel as a Brit
• The UK State Pension abroad: frozen or uprated?
• Double taxation agreements and reliefs