Tax Advice for UK Expats Whether you are planning to leave or return to the UK,
expat status is complicated. Sorting your residence status and
understanding the rules around Income and Capital Gains Tax is essential.
In this blog, the
Bus Employees Friendly Society
want to ensure that you have all the information you need to become or return
as a UK expat. Residence Status
Ensuring your residence status is correct is an essential
part of the expat process. If done incorrectly, you may end up paying more tax
than you need to or even be liable for punitive tax.
To know whether you are a UK or non-UK resident, the UK has
the Statutory Residence Test (SRT). There are four elements to the SRT
Length of Time You Have Been in the UK in the Tax Year Automatic Overseas Test Automatic UK Tests Sufficient Ties Test
Your results will indicate what type of resident you are. You
are considered a non-UK resident if you meet the conditions of the Automatic
Overseas Test. However, if you instead meet with either the Automatic UK Tests
or Sufficient Ties Test then you are considered a UK resident.
Income Tax and Personal Allowance
The basic tax rule for non-residents of the UK is that you
can only be taxed from income that comes from the UK, whether that be via your
profession, trade or vocation. If your profession takes place in the UK, you
may have to pay tax depending on certain
Even as a non-resident British citizen, the tax-free
allowance is still available if you: Have a British Passport Are a Citizen of a European Economic Area Country Work For the UK Government During a Tax Year
If any of the above criteria apply, you are eligible for the
personal allowance which in the 2020/21 tax year is £12,500. You will be taxed
anything you earn above the personal allowance.
If you are a resident of more than one country, there is
probably a double tax treaty in place. This will ensure that you do not pay tax
on the same taxable income more than once.
Capital Gains Tax
For the most part, non-residents of the UK are not subject
to capital gains tax. There are exceptions, including when a non-resident is
trading in the UK through an agency or when anti-avoidance legislation considers
capital gains as income.
Another exception is when a non-resident who has been a
citizen of another country for less than five complete tax years returns and is
assessed on gains earned during their absence. No matter what, however, expats
and non-residents who have sold or plan to sell a UK property will owe capital
gains tax on any profits made.
Find Out More
Contact Bus Employees Friendly Society in
Reigate for more tax advice for UK expats, whether you are leaving or
returning. Call us on
01737 226 060 or fill
in our contact form for
a prompt response.