UK Expat Tax Advice & Returns
If you have left or are leaving the UK partway through the tax year you need to consider your eligibility for split year treatment which will enable you to split the tax year into two parts.
Should you qualify for split year treatment and no longer be in receipt of any UK sourced income you can make a claim for a tax refund due to unused personal allowances by preparing a form P85 leaving the UK.
As a non-UK tax resident you will need to lodge a UK Tax Return with HM Revenue & Customs if you have:
- Income from renting out a UK property including your main residence.
- Income from savings, investments and dividends.
- Any other UK untaxed income.
You will need to register for self assessment and lodge a UK Tax Return if not already registered.
If your only source of income is from wages or pension you may not need to do a tax return unless you have a liability to tax or do not have an exemption from UK tax obligations in relation to your UK Pension.
When considering an overseas secondment to Australia you must first give consideration as to what your tax implications are in Australia and the UK being the country you are leaving.
The questions to consider:
How long is the secondment for?
Is your family to travel with you, or remain behind?
Will I remain a tax resident in my country of residence?
Will I continue to remain an employee of my current employer?
Am I to transfer to the overseas employing office and if so, what are the terms?
Will I be an Australian tax resident?
Does Australia have a double taxation agreement with my country of residence?
Your tax residency is fundamental to determine who has taxing rights over your worldwide income with particular reference to the salary being offered to you.
As a Tax Resident of Australia you are subject to income tax on your worldwide income.
It is possible to be a dual resident with the UK. Should this be the case you would need to consider which country has overriding residency which is commonly referred to as treaty residency as it is the conditions set in the double taxation agreement which would determine this deciding point.
Once your residency position has been determined you can better understand who has taxing rights over your income along with your tax reporting obligations in both countries.
If you have left or are leaving the UK partway through the tax year to live or work in Singapore, Hong Kong or Dubai (UAE) you would need to consider your eligibility for split year treatment which will enable you to split the tax year into 2 parts.
Should you qualify for split year treatment and no longer be in receipt of any UK sourced income you can make a claim for a tax refund due to unused personal allowances by preparing a form P85 leaving the UK.
As a non-UK tax resident you will be required to lodge a UK Tax Return with HM Revenue & Customs if you have:
Income from renting out a UK property including your main residence.
Income from savings, investments and dividends.
Any other UK untaxed income.
You will need to register for self assessment and lodge a UK Tax Return if not already registered.
If your only source of income is from wages or pension you may not need to do a tax return unless you have a liability to tax or have an exemption from UK tax in relation to your UK Pension.
If you have left or are leaving the UK partway through the tax year to live or work in Hong Kong, you would need to consider your eligibility for split year treatment which will enable you to split the tax year into 2 parts.
Should you qualify for split year treatment and no longer be in receipt of any UK sourced income you can make a claim for a tax refund due to unused personal allowances by preparing a form P85 leaving the UK.
As a non-UK tax resident you will be required to lodge a UK Tax Return with HM Revenue & Customs if you have:
Income from renting out a UK property including your main residence.
Income from savings, investments and dividends.
Any other UK untaxed income.
You will need to register for self assessment and lodge a UK Tax Return if not already registered.
If your only source of income is from wages or pension you may not need to do a tax return unless you have a liability to tax or have an exemption from UK tax in relation to your UK Pension.
If you have left or are leaving the UK partway through the tax year to live or work in Dubai you would need to consider your eligibility for split year treatment which will enable you to split the tax year into two parts.
Should you qualify for split year treatment and no longer be in receipt of any UK sourced income you can make a claim for a tax refund due to unused personal allowances by preparing a form P85 leaving the UK.
As a non-UK tax resident you will need to lodge a UK Tax Return with HM Revenue & Customs if you have:
Income from renting out a UK property including your main residence.
Income from savings, investments and dividends.
Any other UK untaxed income.
You will be required to register for self-assessment and lodge a UK Tax Return if not already registered.
If your only source of income is from wages or pension you may not need to do a tax return unless you have a liability to tax or have an exemption from UK tax in relation to your UK Pension.
If you have left or are leaving the UK partway through the tax year to live in Singapore you need to consider your eligibility for split year treatment which will enable you to split the tax year into 2 parts.
Should you qualify for split year treatment and no longer be in receipt of any UK sourced income you can make a claim for a tax refund due to unused personal allowances by preparing a form P85 leaving the UK.
As a non UK tax resident you will be required to lodge a UK Tax Return with HM Revenue & Customs if you have:
- Income from renting out a UK property including your main residence.
- Income from savings, investments and dividends.
- Any other UK untaxed income.
You will need to register for self assessment and lodge a UK Tax Return if not already registered.
If your only source of income is from wages or pension you may not need to do a tax return unless you have a liability to tax or have an exemption from UK tax in relation to your UK Pension.
Establishing your UK tax residency status
To determine your UK tax residency status there are various Statutory Residence Tests to be applied split into the various parts.
If you have been in the United Kingdom for greater than 183 days then you do not need to consider these tests.
You will not be considered resident in the UK for the whole tax year if you do not meet any of the following:
- the automatic overseas tests
- the automatic UK tests
- the sufficient ties test
Automatic overseas tests
There are 3 tests to consider.
First automatic overseas test
You’ll be non-UK resident for the tax year if you were resident in the UK for one or more of the 3 tax years before the current tax year, and you spend fewer than 16 days in the UK in the tax year.
Second automatic overseas test
You’ll be non-UK resident for the tax year if you were resident in the UK for none of the 3 tax years before the current tax year, and spend fewer than 46 days in the UK in the tax year.
Third automatic overseas test
You’ll be non-UK resident for the tax year if you work full-time overseas over the tax year and:
- you spend fewer than 91 days in the UK in the tax year
- the number of days on which you work for more than 3 hours in the UK is less than 31
- there is no significant break from your overseas work
A significant break is when at least 31 days go by and not one of those days is a day where you:
- work for more than 3 hours overseas
- would have worked for more than 3 hours overseas, but you did not do so because you were on annual leave, sick leave or parenting leave
If you have a significant break from overseas work you’ll not qualify for full-time work overseas.
The test:
- can apply to both employees and the self-employed
- does not apply to volunteer workers or workers with a job on board a vehicle, aircraft or ship
UX Tax Overview
2022' - 2023' Marginal tax Rates
The rates of UK Tax are the same for non-residents and tax residents of the UK.
Below are the rates of tax you pay after the Personal Allowance of £12,570.
You do not get a Personal Allowance on taxable income over £125,140.
Temporary non-Residence Rules
The temporary non-residency rules prevent a former UK tax resident from being absence from the UK for a short period of non-residence to realise income or gains outside of the UK and avoid paying tax in the UK.
These rules will apply if the you have been a UK tax resident in at least four of the seven years prior to the date of your departure and you become a tax resident again with five years of that date.
Capital gains and receipts subject to income tax that may arise during the period of temporary non-residence are then caught by these rules and are brought into charge.
Tax filing obligations for UK expats
As a non-UK tax resident you will need to lodge a UK Tax Return with HM Revenue & Customs if you have:
- Income from renting out a UK property including your main residence.
- Income from savings, investments and dividends.
- Any other UK untaxed income.
You will need to register for self assessment and lodge a UK Tax Return if not already registered.
If your only source of income is from wages or pension you may not need to do a tax return unless you have a liability to tax or do not have an exemption from UK tax in relation to your UK Pension.
UK Rental Income & Capital Gains Tax
If you own a property in the UK that you rent out and receive income you will pay tax in the UK on the profit you make from renting out the property after deductions for allowable expense.
Allowable expenses are costs that are incurred in the day to day running of the property such as:
- Letting Agent Fees
- Accountants Fees
- Buildings & Contents Insurance
- Maintenance & Repairs to the property (not improvements)
- Utility Bills (gas, electricity & water)
- Council Tax
- Gardening/Cleaning
- And other direct costs of letting the property like phone calls, stationary & advertising
There are different tax rules for:
- Residential Properties
- Furnished Holiday Lettings
- Commercial Properties
The rental income received and expenses incurred are reported on your Self Assessment Individual Tax Return and income tax is charged on the net profit after taking into consideration your personal tax allowance (if applicable).
Non Resident Landlord Scheme
Under the UK’s Non-Resident Landlord (NRL) scheme a landlord with a usual place of abode outside of the UK has tax on their UK rental income collect by a UK letting agent or tenant can apply to HM Revenue & Customs (HMRC) to receive their rental income from the UK property without tax being deducted.
Upon receipt of approval granted by HMRC the rental income will be received gross by the landlord.
Capital Gains Tax
As a non-UK tax resident the only gains that are reportable to HMRC are those in relation to the disposal of UK property or land:
- residential UK property or land (land for these purposes also includes any buildings on the land)
- non-residential UK property or land
- mixed use UK property or land
- rights to assets that derive at least 75% of their value from UK land (indirect disposals)
National Insurance Contributions
You may be eligible to pay National Insurance Contributions while you are working or living overseas.
This will be dependent on where you are working and how long for.
You might be eligible to make voluntary class 2 national insurance contributions while overseas.
Employment income Tax
If you work abroad temporarily, you will need to consider your tax position in the UK and the overseas country separately. If you work overseas, you are likely to be taxable in the overseas country where you work whether or not you remain taxable in the UK will depend of your residency position.
When considering whether or not your earnings from employment are UK earning or non-UK earnings, it is the place of performance of your duties which is relevant and not the location of your employer or where you are paid (though these factors may have an impact on your overall position.
Expat Tax Deductions & Reducing Liabilities
Claim income tax refund on UK generated PAYE income for part of the year.
If you are leaving the UK part way through the tax year and will no longer be in receipt of any UK sourced income once you are departed you can make a claim for a tax refund by completing a form P85 Leaving the UK – getting your tax right.
Submitting a Self Assessment Tax Return
You are required to file a UK Tax Return should you have the following income
Salary earned from working abroad
Rental income
Dividends, interest, and rental income
Income & gains from stock option exercises
Taxation of investment income and capital gains
Disposal of UK property
Principle residence gains and losses
You will need to register for Self Assessment before you can submit a Tax Return to HMRC.
Once you have registered to you file a tax return by using commercial software, paper forms or by using the services of accountants such as GM Tax.
late Filing Penalties
Failure to lodge your tax return can result in penalties of up to £1,300.
Failure to your taxes on time will result in interest from being charged from the due date of payment.
HMRC will charge daily interest for fines exceeding three months.
The penalty rates are available through the HMRC website.
Returning to the UK - important considerations
It is important to obtain arrival income and capital gains tax advice and guidance when considering arriving in the UK to ensure that you are fully aware of your tax position.
Your tax residency is fundamental as this determines how your worldwide income is taxed and reported. When arriving to the UK it is important to know the effective date that you commenced to be a UK tax resident for tax purposes as this date should not be mixed up with the date of arrival.
If you are in receipt of UK sourced income and your income exceeds the personal tax allowance then yes you will pay UK tax.
If you are required to lodge a UK Tax Return you will need to register for self assessment and obtain a UTR number to enable you to lodge a Tax Return.
You do this by submitting a form SA1 – Registering for Self Assessment to the HMRC. Upon receipt HMRC will issue you with a UTR number.
You can register online via HMRC website or we can assist you by preparing a form SA1 registering you for Self Assessment and submitting to HMRC on your behalf.
The filing deadline will vary depending of whether you are lodging a paper or electronic tax return:
For paper submission the filing deadline is 31 October.
For electronic submission (commercial software or accountant) the filing deadline is 31 January.
If you work abroad temporarily, you will need to consider your tax position in the UK and the overseas country separately. If you work overseas, you are likely to be taxable in the overseas country where you work whether or not you remain taxable in the UK will depend of your residency position.
When considering whether or not your earnings from employment are UK earning or non-UK earnings, it is the place of performance of your duties which is relevant and not the location of your employer or where you are paid (though these factors may have an impact on your overall position.
If during a year you either start to live or work overseas – or come to the UK from overseas to live or work in the UK – the tax year will be split into 2 parts if your circumstances meet specific criteria:
A UK part, for which you are charged to UK tax as a UK resident
An overseas part for which, for most purposes, you are charged to UK tax as a non-UK resident
The remittance basis is an alternative tax treatment available to individuals who are resident of the UK but not domiciled in the UK and have foreign income and gains.
UK expat Tax Return & Advice Services
Speak to our UK tax experts for fixed fee quotes for UK tax advice, UK annual tax returns and Capital Gains Tax returns.
If you are being seconded to Australia and would like a fixed fee proposal from a firm of tax advisors that understands the issues affecting expats living and working overseas please complete our contact us button or by calling a GM Tax office closest to you.
GM Tax also offers the following UK tax services:
GM Tax also offers the following UK tax services:
- Tax planning advice and guidance with regards to your residency status in the UK, eligibility for split year treatment and also domicile status in the context of Inheritance Tax (IHT) planning.
- Preparation of UK tax returns, with all returns submitted to HM Revenue electronically where possible.
- Advice on the tax position where a property in the UK is being let while a taxpayer is living overseas.
- Assistance to ensure UK source income of those who are non-residents of the UK is properly taxed and is not taxed twice, or double taxed.
- This last point is particularly relevant to those who have UK source income or capital gains which may also be subject to tax in the country in which the taxpayer is now resident.