UK taxes

Expert tax tips for UK expats

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Some helpful pointers for UK residents to consider when leaving the UK.

When leaving the UK to reside abroad, there are a number of financial considerations, to ensure you are paying the appropriate UK taxes and maximise the opportunities available to you as an expat. Martin Rimmer provides some helpful pointers.

 1.    Things to organise when you leave the UK

First and foremost, ensure you take the right steps when leaving the UK for tax purposes, including submitting the Form P85 and claiming entrance into the Non-Resident Landlord Scheme if renting out a UK property.

Many departing expatriates do not claim income tax refunds that they are entitled to. Make sure to assess your position for the full tax year of departure to ensure you claim all of the UK allowances you are entitled to.

If you leave part way through a tax year, you may not have received the full benefit of the personal allowances you are entitled to through your salary. You might be able to recover some of the tax you have already paid.

Couple  relocating

2.    UK tax allowances

If you are not resident in the UK, entitled to UK tax allowances as a non-resident and have continuing sources of UK income that present you with a tax liability and filing obligation year on year, ensure that any immovable assets situated in the UK (most commonly property) are held in joint names with your spouse.

Also, if you have movable assets in the UK, such as cash on deposit, it may be beneficial to transfer the funds offshore, perhaps to the Channel Islands or the Isle of Man which sit comfortably outside the UK tax system but within the UK banking system. This will ensure any interest you earn is not subject to UK tax whilst you remain overseas.

3.    Maintain non-resident status

Merely being abroad is often not enough to guarantee non-resident status; you need to move overseas and ensure you are no longer living in the UK. This can be easier said than done if you are maintaining a family in the UK or perform duties of employment in the UK. Individual advice is required to take into consideration your individual circumstances.

Also, keep an accurate record of your movements to and from the UK as the rules about days spent in the UK have tightened in the last year. You must spend fewer than 91 midnights in the UK per tax year to maintain non-resident status, though other factors must also be taken into account.

4.    Exporting UK pension rights

It is astounding how people ask about their frozen UK pensions. Since April 2006 it has become possible to transfer rights in any UK occupational pension scheme or Personal Pension Plan to a Qualifying Recognised Overseas Pension Scheme without incurring a charge to UK income tax. This may allow expatriates to consolidate various UK pension entitlements in a way that was not possible before.

5.    Take local advice

Whilst it is important to make sure that you achieve non-resident status and keep your UK tax position as closely monitored as possible, it is also vital to ensure that you look after your tax affairs in your new country of residence. Before executing any UK tax efficient recommendations, make sure that your local tax position would not be jeopardised.  Always seek local support from a reputable local advisory or speak to a company that has international outreach and can support you, wherever you may be.

Couple   with advisor

6.    Plan your return to the UK carefully

Real care is needed if, having extricated yourself from the UK tax system as a non-resident, you decide to return. The UK has an evolved system of taxation, including income tax of up to 50 percent, a wide ranging capital gains tax (flat rate of 18 percent), inheritance tax on estates (40 percent) and certain lifetime gifts (20 percent), the full range of stamp duties 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 your arrival is disclosed and documented properly and that proper tax planning is taken so 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. We do hope, however, they have given you some food for thought for becoming as tax-efficient as possible.  


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