| ALIYAH & TAX GUIDE · 2026 Moving to Israel from the UK? Here’s what you need to know about tax. A plain-English guide to the exemptions, the new 2026 laws, and your filing obligations as a new Oleh. |
The big one: your 10-year tax holiday
When you make Aliyah, Israel gives you one of the most generous tax breaks in the world — a full 10-year exemption on all income and assets sourced outside of Israel. This has been in place since 2007 and remains intact today.
In simple terms: for your first decade as an Israeli resident, Israel will not tax you on money you earn, receive, or hold in the UK — regardless of whether you bring it to Israel or leave it there.
What UK income is exempt?
The following types of UK-sourced income are covered by the 10-year exemption:
| PROPERTY Rental income from UK property ✔ Exempt in Israel | INVESTMENTS Dividends from UK shares or funds ✔ Exempt in Israel | PENSION UK pension (state or private) ✔ Exempt in Israel |
| SAVINGS Interest on UK bank accounts or bonds ✔ Exempt in Israel | CAPITAL GAINS Profit from selling UK assets or shares ✔ Exempt in Israel | BUSINESS Income from a UK company you own ✔ Exempt in Israel for operations carried out outside of Israel |
What is NOT exempt?
Until the recent legislation changes, the exemption only covers foreign-sourced income. Once you’re living in Israel, income you earn in Israel is fully taxable — regardless of who pays you or where the money is sent.
| ISRAELI SALARY Working from Israel for an Israeli employer ✔ Taxable in Israel | REMOTE WORK Working from Israel for a UK employer ✔ Taxable in Israel | FREELANCING Self-employed work done while in Israel ✔ Taxable in Israel |
New for 2026: Israeli income tax exemption
In a landmark move, the Israeli government introduced an additional incentive exclusively for new Olim arriving from November 2025 through the end of 2026. On top of the existing 10-year foreign income exemption, qualifying new arrivals will pay zero Israeli income tax on their Israeli-earned income for up to five years — with the exempt amount gradually reducing over time.
| This is a separate and additional benefit to the 10-year foreign income holiday. It is designed specifically to encourage high-earning professionals to make Aliyah in 2026. |
The annual tax-free caps on Israeli-earned income are as follows:
| 2026 | Zero income tax on Israeli earnings Up to ₪600,000 (~£130,000) |
| 2027–2028 | Zero income tax on Israeli earnings Up to ₪1,000,000 (~£215,000) per year |
| 2029 | Zero income tax on Israeli earnings Up to ₪350,000 (~£75,000) |
| 2030 | Zero income tax on Israeli earnings Up to ₪150,000 (~£32,000) |
If you arrive in the middle of the year there is a partial exemption.
Your new filing obligation from 2026
This is the most significant change for anyone arriving from January 2026 onwards — and one many new Olim are unaware of.
Previously, new Olim could enjoy the 10-year tax holiday without having to report their foreign income or assets to the Israeli Tax Authority at all. That reporting exemption no longer exists for arrivals from 1 January 2026.
From now on, you must:
- File an annual tax return with the Israeli Tax Authority, reporting all worldwide income.
- Declare foreign assets — including property, investment accounts, and trusts.
- In many cases, submit a capital or wealth declaration alongside your return.
Think of it as Israel asking to see the picture, even if they’re not charging you for the frame.
Quick summary
| Income Type | Exempt from Israeli Tax? | Must Report (2026+)? |
| UK rental income | ✔ Yes (10 years) | ✔ Yes |
| UK dividends | ✔ Yes (10 years) | ✔ Yes |
| UK pension | ✔ Yes (10 years) | ✔ Yes |
| UK capital gains | ✔ Yes (10 years) | ✔ Yes |
| UK interest / savings | ✔ Yes (10 years) | ✔ Yes |
| UK employment (work done in UK) | ✔ Yes (10 years) | ✔ Yes |
| Work done in Israel (Israeli salary/UK salary/self-employed) | ✗ No — taxable in Israel | ✔ Yes |
| Israeli salary / self-employment | ✗ No (but 2026 caps apply) | ✔ Yes |
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When Income Comes from a Family Member’s Business
It is worth noting that not all qualifying income is treated equally under the new rules. If your income is derived from a company or business owned by a relative, the annual exemption cap is considerably lower — set at ₪140,000 per year rather than the standard amounts outlined above. This distinction exists as an anti-abuse safeguard, designed to prevent the channelling of income through related parties simply to maximise the benefit.
It is also worth being aware that for olim who receive dividends or income from foreign companies — whether family-connected or otherwise — there is an interesting interaction with the longstanding 10-year exemption on foreign-sourced income. The two frameworks do not always sit neatly side by side, and depending on how your income is structured, questions can arise about which rules apply and in what order. This is not a reason for concern, but it is the kind of area where taking early professional advice, before finalising any financial arrangements, can save considerable complexity down the line.
If you have any questions or require advice on how these rules apply to your personal situation, please feel free to contact Shimshon Goodman at FKGB Accounting — by email at shimshon.goodman@fkgb.co.uk, by WhatsApp on +44 7391 976 701, or by booking a free 15-minute introductory meeting directly via his calendar at https://calendly.com/shimshon-goodman-fkgb/30min.
