Tax for Expats

08 May 2017

We are pleased to announce a new service - Tax for Expats

Expat tax affairs can be complicated, it’s a common misconception of British expats that when they move abroad they are instantly exempt from UK tax. Unfortunately, this is far from the truth.

The tax treatment of an expat depends upon their residence status, this is determined using the Statutory Residence Test (SRT). HMRC’s guidance on how to apply the SRT runs to 105 pages.

Income Tax

Non-residents are only chargeable to UK income tax on income arising from a source in the UK.

This could be profits from a trade (sole trade or partnership), from a property business, from employment income, or pension income.

Dividend income, interest, and other savings income is also taxable, however there are special rules which may disregard this income.

The personal allowance is currently available to all non-resident British Citizens, however this is currently under review.

Capital Gains Tax

Non-residents are not usually subject to UK capital gains tax, however there are four cases where they are:

1.      A non-resident individual or trust trading in the UK through a branch or agency is chargeable in respect of UK assets used or held in or for the purposes of the trade or the branch or agency. The same applies to companies trading in the UK through a permanent establishment.

2.      Certain anti-avoidance legislation deems capital gains to be income and, as such, taxable even if accruing to a non-resident.

3.      An individual who is non-resident for less than five complete tax years is assessed in the year of his return on gains realised during his absence on assets he held on the date of departure. This does not apply to those individuals who were resident in the UK in less than four of the seven tax years preceding the year of departure.

4.      From 6th April 2015 non-residents who are selling a UK residential property will owe capital gains tax on any gains made, this has to be notified and paid within 30 days to avoid penalties.

If you require any assistance with any UK tax matter please contact us or get in touch today by calling +44 (0) 203 039 3993.

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