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While there are plans to introduce a statutory residence test from April 2013, anyone looking at relocating from the UK should make themselves aware of the current attitude of HM Revenue & Customs and consider how their circumstances would be evaluated.
Also, if you are letting out UK property, take the time to register under the Non-Resident Landlord scheme. Without this, your letting agent or tenant would be obliged to deduct tax from rents paid to you and pay this over to HMRC. Approval under the scheme means that money can be paid to you without tax deduction.
3. UK tax returns
If you have continuing sources of UK income, you may need to file an annual tax return. Do be warned that a more stringent penalty regime applies to the late submission of tax returns, which means a GBP 100 fixed penalty will apply for any Return that is submitted late - even if there is no tax to pay or if the tax due is paid on time. Continual non-submission will also lead to additional penalties and automatic penalties of GBP 10 per day.
4. Look to reduce any remaining liabilities
8. Plan your return to the UK carefully
Real care is needed if, having been treated as a non-resident, you decide to return. The UK has an evolved system of taxation, including income tax of up to 50%, a wide ranging capital gains tax (either 18% or 28%), inheritance tax on estates (40%) and certain lifetime gifts (20%), and a not insubstantial social security levy.
Any exposure to the UK tax system as a resident needs to be planned very carefully, particularly where substantial assets and shareholdings are concerned.
You must also ensure that your arrival is disclosed and documented properly and that proper tax planning is taken so that liabilities are minimised once you return. With a little forward planning, this is usually possible.
The above does not constitute definitive tax advice as everyone's personal circumstances are different. Therefore it is important to seek personalised advice based on your individual needs. I do hope, however, that they have given you some food for thought for becoming as tax-efficient as possible.
Dean Power, Assistant Tax Manager, The Fry Group
Got questions? Contact Dean via our Ask the Expert channel (in the Tax category).
The levels and basis of taxation are subject to change.
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