If you are leaving the UK to live or work abroad, it is important organise your affairs correctly to minimise your tax liabilities. How you are taxed in the UK after your departure depends on how long you intend to remain overseas and where your income and investments are situated.
Here are some important points about leaving the UK and some tips which can help you to reduce your tax bill:
UK tax status – When you leave the UK you need to let HM Revenue & Customs know that you are leaving and inform them of your intentions in term of length of stay outside the UK. It is important that this form is completed correctly as unless you take advice on it’s completion you can jeopardise your opportunity to become non-UK resident
We would be happy to help you complete and submit this form so that you ensure that you break UK residence (whilst still being accurate to your situation of course!). We can also deal with any queries raised by HM Revenue & Customs on your behalf.
Refund of UK tax paid before departure – If you leave the UK part way through a tax year and have paid tax via PAYE e.g. on employment income, you may be able to receive a tax refund of some/all of this tax paid.
Tax 4 Expats can claim this refund for you and will deal with any queries raised by HM Revenue & Customs on your behalf.
Avoiding UK tax on overseas employment income – If you are leaving the UK to work abroad for more than one complete UK tax year (6 April to 5 April), you may be able to avoid UK tax on any employment income you receive whilst you are working overseas, even if you are still paid into your UK bank account. There are rules you need to meet in order to do this, for example your job must be full time and there is a limit on the number of days you can spend in the UK whilst you are working abroad.
Tax free benefits – If you situation means that you cannot avoid UK tax on your employment income e.g. you are not going to be outside the UK for a complete UK tax year, it may still be possible to avoid UK tax on certain benefits provided by your employer. If your work abroad is temporary and your employer provides you with benefits such as accommodation, a subsistence allowance, and reimburses your travel costs, it is possible to be provided with these benefits tax free. Without this tax relief, you would be liable to tax on the cost of these items to your employer.
Tax 4 Expats can claim these tax reliefs on your behalf – if you think that you were entitled to these reliefs in previous years but have not claimed them we can make a claim to HM Revenue & Customs to get this tax back for you.
Structuring your affairs to avoid UK tax – If you leave the UK and break UK residence e.g. you are leaving the UK to work for more than a complete UK tax year, you will usually remain liable to UK tax on any UK sources of income such as UK interest or dividends received from UK companies. You will still be entitled to your UK personal allowance as a non-resident but if your UK income exceeds the personal allowance you may have additional tax to pay. If you have substantial investments it can be beneficial to move these offshore whilst you are living abroad, where you can build up funds free of UK tax, if you choose the offshore location correctly you can avoid paying any tax on the income arising. When you return to the UK it is usually possible to bring these funds into the UK free of tax.
Avoiding Capital Gains Tax – If you are planning to be abroad for several years, you may also be able to avoid UK capital gains tax if you sell UK assets whilst you are non-resident. This can be hugely beneficial if you have assets which are pregnant with capital gain. In order to take advantage of this relief you must meet certain criteria including being outside of the UK for 5 complete tax years.
Your UK property – If you decide to rent out your UK property whilst you are abroad you will remain liable to UK tax on any income received. There are however many expenses you can set against the income to reduce any tax due, we can of course advise you on these expenses and claim then via your tax return.
With non-UK resident landlords your letting agent (or your tenant if you are not using an agent) is required to withhold basic rate tax from your rental income and pay this to HM Revenue & Customs. If your estimated net rental income is below a certain threshold, we can obtain agreement from the HM Revenue & Customs that you can receive your rental income gross. We can also advise on the future capital gains tax implications of letting the property, and give you advice on how to maximise the principle private residence relief.
Tax Return preparation and submission – Tax 4 Expats aims to offer a friendly and efficient tax return service. We prepare your tax return (claiming all available tax relief’s to minimise your tax liability) and provide a calculation of your tax liability. We send you your tax return in pdf format and file it electronically with HM Revenue & Customs on your behalf. If you prefer paper copies these can also be provided.
HM Revenue & Customs Enquiries – Each year HM Revenue & Customs selects some tax returns to enquire into. If you are selected for this, we will liase with HM Revenue & Customs on your behalf, attend any meetings with them and deal with any correspondence from them. We aim to make it as stress free for you as possible.