Expats from the UK are often unaware of their moves tax implications – and many people make the mistake of thinking they’ll be completely exempt from UK tax.
This is often not the case, so in this article, we’ll advise you on the rules and regulations and help you understand your situation.
When do I have to pay tax?
You usually have to pay tax on your UK income even if you’re not a UK resident. HMRC classes the following as income::
- pension
- rental income
- savings interest
- wages.
If you’re eligible for a personal allowance, you pay income tax on your income above that amount. Otherwise, you pay tax on all your income.
The country where you live might tax you on your UK income. This country might have a ‘double-taxation agreement’ with the UK; you can claim tax relief in the UK to avoid being taxed twice.
When should I get in contact with HMRC?
If you do one of the following:
- rent out property in the UK
- work for yourself in the UK
- have a pension outside the UK, and you were a UK resident in one of the five previous tax years
- have other untaxed income.
You’ll have to declare so as part of a self-assessment form. This form can’t be completed via the HMRC online portal, however. You’ll have to submit via post or get someone based in the UK, like us as your accountant, to do it for you.
If you live abroad for six months or more per year, you’re classed as a ‘non-resident landlord’ by HMRC – even if you’re a UK resident for tax purposes.
If you need more guidance and information, read the .gov website.
What happens if I move abroad in the middle of a year?
If you return or leave the UK, you may qualify for split-year treatment.
These non-resident UK tax rules are favourable to those who would otherwise be resident for the whole tax year and allows the tax year to be split into two periods.
It’s always worth discussing this with your adviser to get the best result and to allow yourself an appropriate amount of time to complete any necessary paperwork.
What else might be important?
Depending on various factors, there may be hidden liabilities as part of submitting your return that you’ll be unaware of.
PPR, for example – where you dispose of (sell) a property you own – can cause additional capital gains tax if the proper protocols are not followed.
From 6 April 2015, if you sell (or dispose of) the whole or part of an interest in a UK residential property when non-resident, you must tell HMRC within 30 days of the date of conveyance. You may have to pay CGT on any gains you make.
It’s always best to plan for this with a pre-arrival plan that gives you a foundation for your self-assessment rather than leaving it to the last minute.
Talk to us
Due to the complexity of moving abroad and still having ties to the UK, countless things could appear and cause financial stress.
If you talk to us, we can advise you on where we think you could focus your efforts. It’s worth it to avoid the horror of receiving a tax bill you weren’t expecting.
Let’s talk about your status as an expat today.