Expat Tax Advice If you are a British expat, it is important you understand
your UK tax requirements. Expat tax can be complicated and one of the most
common mistakes British expats make is that they are exempt from UK tax.
This month’s blog at the
Employees Friendly Society is offering you British expat tax advice. To
find out more, call us on 01737 226 060. Why is Your Residential Status Important?
British residents may potentially be liable to UK Income Tax
and Capital Gains Tax on worldwide income. However, if you are not a UK
resident, different rules apply.
Non-residents in the UK are only taxed on income coming from
a UK source. Dividend income, interest and other savings income is also taxable
if it is from a UK source. Unless there are specific relieving reasons, this
income is chargeable at both basic and higher rate tax.
If you are a non-resident from a country in which the UK has
taxation treaty, the UK has restrictions to taxing rights of specific
incomes. When the UK does not have a double treaty, ‘unilateral relief’
applies. This is relief from double taxation.
To find out whether you are a UK resident or non-resident,
the Government has the
Residence Test (SRT). Capital Gains Tax
Non-residents are not subject to Capital Gains Tax. However,
there are exceptions:
A non-resident individual or trust trading in the UK
through an agency/branch is chargeable regarding the use of UK assets for the
purpose of the trade or branch/agency. This also applies to companies trading
through a permanent establishment. Specific tax
avoidance legislation considers capital gains to be income,
therefore taxable even if you are a non-resident. An individual who is a non-resident for less than 5 full
tax years is assessed on gains attained during their absence on assets held on
the date of departure.
If you were resident in the UK for less than 4 of the 7 tax
years prior to the year of your departure, this does not apply.
th of April 2015, British expats and
non-residents selling a UK property owe Capital Gains Tax on any gains made. Resident in More Than One Country?
You can be resident in the UK and another country at the
same time. This is called ‘dual residence’. In most cases, there will be a
double tax treaty between the two countries of residence.
If you are a dual resident, you should seek professional
advice to ensure you don’t pay full tax twice on the same income or capital
For more expat tax advice, don’t hesitate to
contact Bus Employees Friendly Society in Reigate. Call us today on
01737 226 060 or fill out our contact form.