A UK tax consultant can help you with your affairs, even when you no longer reside in the UK. With Brexit looming, it is important to understand more than ever before your tax obligations as a UK citizen living abroad. Below is a look at what you should know for now. When the UK leaves the EU, we will update you on changes as they unfold.
Residence and Domicile
Your personal liability to taxation in the UK depends on various factors. These include your actual tax residence and your domicile status. Your liabilities also depend on the situs of any asset you may have. The source of your income and your capital gains also come into play. If you thought that you can forget about the UK tax system because you live abroad, you are wrong. If you have cut all ties with the UK and have long since been living abroad and are fully integrated with the tax system where you live, you however are likely to be exempt.
If you have a UK residence, you are potentially liable to UK capital gains tax and UK income tax. If your habitual residence is not in the UK, then you generally will only be charged tax on gains that come from a source within the UK. If you carry out a profession in the UK or you are in receipt of money from land or property in the UK, you will have to pay tax. It should be remembered that dividend income is also taxable. Income can be charged at both the basic and higher rates, exactly the same as if you still lived in the UK.
UK Tax Consultant : Changes to Taxes for Non Residents
The tax-free personal allowance is currently under review. To date, this is available to all non-resident British citizens. You obligation to pay tax will also depend on whether your country of residence has a double tax treaty with the UK. The UK has at present an extensive network of double taxation agreements. Once Brexit has passed, all this could change.
Disregarded incomes are not taxable by the UK. This type of income comes from dividends and interest. It does not include rental income; this is taxable.
Capital Gains Tax for Expats
In general, non-residents of the UK are not subject to UK tax of capital gains. Exceptions to the rule are:
- A trust of non-resident individual trading through a branch or agency in the UK. The same applies to companies who trade in a permanent establishment in the UK.
- Capital gains are sometimes deemed to be income by anti-avoidance legislation. If this is the case, your income will be taxable even though you are not a UK resident.
- If you are absent from the UK for less than five years, you will be assessed on your return. If you were resident in the UK for less than four years of the seven before the date you departed, you are not liable for assessment.
Moving abroad can be an exciting time. But, before you leave, consult your UK tax consultant McManus Williams to avoid shocks when you find out that you are still liable to pay tax in the UK even though you no longer reside there.