UK Tax for Expatriates

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Because dealing with tax matters in a foreign country may be difficult, we at Tax Accountant have compiled a list of suggestions that will assist you in comprehending the tax obligations placed on you if you remain domiciled in the UK despite having moved to another country.

Payment of Income Tax 

If you’re a UK resident, you’ll have to pay tax on your overseas income in the UK. However, you will not be subject to UK tax on any foreign income you earn if you are considered a non-resident.

It is essential that you be aware that if you are a resident of the United Kingdom as well as having your permanent home in the United Kingdom, you are required to pay taxes in the United Kingdom on all of your income. Whether you earned this income in the United Kingdom or elsewhere does not matter. Residency criteria are growing more complicated and are based on the Statutory Residency Test, not just the number of days spent in the UK.

On the other hand, if you want to be considered a resident of the UK for tax reasons, you need to be present in the country for a total of 183 days throughout the tax year. You’re considered non-resident if you pass the Automatic Overseas Test. The following will serve as the tests:

You were considered a resident of the UK in one or more of the three tax years before the current tax year, but you spent less than 16 days in the UK during the current tax year.

You were a non-UK resident in the three tax years before the current tax year, AND you spent less than 46 days in the UK during the tax year.

You work full-time somewhere other than the United Kingdom and spend fewer than 91 days in the United Kingdom. Additionally, you work fewer than 31 days in the United Kingdom and work no more than three hours on any day there.

Because of the intricate nature of residency, we strongly suggest that you seek the guidance of a trained specialist at all times.

Capital Gains Tax

Since April 2015, non-residents who sell a property in the United Kingdom may be liable to capital gains tax on the revenues of the sale of the property.

Would the therapy of having two calendar years work for you?

You may be eligible to split the tax year into two parts and, as a result, only be liable for UK tax in the part of the year in which you were considered a tax resident as opposed to for the entire year if you have been a tax resident within the UK for some of the tax year but for the last part of the tax year you have been considered a UK non-resident. For example, this is the case if you have been a tax resident within the UK for some of the tax year but the last part.

Generally speaking, if you meet the criteria outlined in the Statutory Residence Test, you will be considered a tax resident of the United Kingdom. Therefore, in the United Kingdom, an individual’s income is subject to taxation if they meet both the criteria of being a tax resident and having their domicile in the United Kingdom.

How does the income tax system work in the UK?

If you live in the United Kingdom, you are eligible for a personal allowance; this is the maximum amount of money that you may earn in a given year before having to start paying income tax on the money you’ve made. You may also be eligible for the Personal Allowance as a non-resident, depending on the specifics of your situation. Once again, if you are confused about whether or not you qualify for this benefit, we recommend seeing a tax expert or reading the instructions entitled by HMRC.

The personal allowance for the current tax year, 2018/19, is £11,850. Any earnings above this amount, up to £46,350, are subject to tax at 20% as the introductory rate. Anything that is taxed above £46,351 and up to £150,000 is subject to an increased tax rate of 40%, and anything that is taxed beyond £150,000 is subject to an extra tax rate of 45%.

You should be aware that you can be taxed twice on the same income or profits, provided that the nation you came from does not have a double tax treaty with the UK.

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