For some, living outside of the UK and being not UK resident, can be an attractive proposition as, with the right planning, it can mean lower taxes on your income and earnings. For others, moving overseas is a lifestyle choice and is not tax motivated. Whatever your reason for moving overseas, it is essential that you understand the effect your move will have on your UK and global tax position.
Being regarded as not resident in the UK may mean that you can reduce what income tax and capital gains tax you pay in the UK. However, the new Statutory Residence Test which was introduced in April 2013 is littered with complexities and terminology which makes determining your resident status more complex than ever before.
We specialise in UK residence issues and have many yearsâ€™ experience in advising clients on residency issues, avoiding dual residency problems and providing guidance so that you understand the implications of your residency status, how to improve and more importantly how to maintain the residency status which will give you the more efficient tax position.
We are part of the Association of Independent Expatriate Tax Practitioners (AIETP). This is an independent group of tax advisers, the majority of whom are previous “Big four” advisers. AIETP are now represented on the joint expat forum with HMRC which meet quarterly to discuss new developments in the new legislation affecting expatriates and non UK domiciled individuals alike. Â We consider ourselves the largest and most experienced group of expat advisors outside of companies such as PwC, Ernst & Young, KPMG and Deloitte.
Contrary to belief, many non residents will still have a filing requirement in the UK. Perhaps due to a lingering source of UK income such as property income or pensions or occasional UK workdays.
It is also of vital importance that your UK resident status is reported correctly and also from the earliest point. This is no longer straight forward under the Statutory Residence Test.
HMRC do offer online tax return completion, however their software does not support the filing of the Non Residence pages. This means, to correctly file you must file by paper by the 31 October each year. With third party software we do not have this issue, and can file your return right up to the 31 January deadline.
There are of course other compliance issues which need to be dealt with such as ensuring forms P85, NRL1 (non resident landlord scheme) etc are completed and filed with HMRC. Failure to do so can lead to tax being deducted from UK source employment and rental income when there may be no need for tax to be paid.
For some, being not UK resident is too difficult to maintain. With foreign income or earnings you may find yourself with a dual residence status and facing double taxation. It is a common misconception that as long as income is taxed in one country it does not need to be reported in another! This is nearly never the case! However, it takes a sound and experienced knowledge of dual residence and double taxation treaties in order to correctly claim relief and ensure double taxation is avoided. We have many yearsâ€™ experience in this and guide many clients out of this predicament.
You may also be concerned with Capital Gains Tax. From April 2015, HMRC introduced legislation to tax the disposals of residential property held by non residents. We can advise you on the effect it may have on your property sale, and provide you with calculations and tax estimates, as well as consider which reliefs and elections you may be entitled to.