I am British but I no longer live in the UK and I’m not sure if I have to complete a UK tax return. HMRC haven’t sent me a letter, but how can I tell if I should be submitting a UK tax return?
Not all expats are required to submit a UK Self Assessment tax return, however HMRC will not necessarily send you a letter even if you are required to. If you are required to submit a tax return and you fail to do so, you will be charged a penalty and potentially interest on any unpaid tax.
While submitting a tax return does not necessarily mean that you owe tax in the UK, it is important that a return is filed if you are obliged to complete one to avoid any late filing penalties and fines.
Submitting a tax return will ensure you claim any appropriate reliefs you are entitled to i.e. tax treaty relief if there is a double tax agreement in place, which will help you avoid double taxation.
Six key criteria that will help you determine whether you need to submit a tax return
- Are you considered a tax resident of the UK?
- Do/did you receive any untaxed income from sources in the UK (eg. rental income from a UK property)?
- Do you have income from abroad that you need to pay tax on?
- Are you a director of a UK registered company?
- Was your UK taxable income over £100,000?
- Have you sold a UK property, shares or something else that you need to pay capital gains tax on?
If you answered yes to any of the above criteria, you will probably have to submit a tax return in the UK regardless of whether you are British or a foreign national.
If you are unsure about the answer to any of the above questions, it is possible that you will be required to submit a tax return and you should seek guidance on whether you need to submit a tax return.
Request a free consultation and establish if you need to submit a tax return
If you are unsure about whether you need to submit a tax return, you should always seek advice from a qualified professional to avoid potential fines.
At Expat help Centre we provide an introductory service to qualified tax consultants who will offer a free, 15-minute consultation during which they will be able to establish whether you need to submit a tax return.
If it is determined that you need to complete and submit a tax return they will also be able to provide you with a fee quotation for their services and you will be free to decide whether to proceed with them or not.
To request your free tax consultation, simply complete the form and we will select the most suitable consultant from our network who will contact you and arrange a suitable time for you to talk directly.
I’m currently a UK non-resident but I am considering buying a house in the UK. Do I have to pay stamp duty to the HMRC?
As with most tax questions, it will depend on your personal circumstances as to whether you are required to pay stamp duty when buying a house in the UK.
Unlike with other taxes, your tax residence status in the UK makes little to no difference whether you will have to pay stamp duty or not.
The conditions around how much stamp duty you will be required to pay depend on whether you own one or more properties in the UK or anywhere in the world.
For example, if you live abroad but don’t own a UK property and currently rent, you will not be liable to pay the higher rate of stamp duty when buying a property.
However, if you own a property anywhere in the world, whether you live in it or not, and want to buy another UK property, you will be required top pay the higher rate of stamp duty.
Stamp Duty Calculator
We have created a stamp duty calculator for people in the UK and abroad who would like to know how much stamp duty they will have to pay in the UK when buying a property.
My estate is valued at over £350,000. If I die abroad, do I have to pay inheritance tax?
Under UK rules, inheritance tax depends on the domicile of the deceased.
Your domicile is often the country of your birth, but is defined as your permanent home.
If you were born in the UK and then move abroad, while you may change your tax residence status to non-resident, you will not have changed your domicile which means that your estate will still be subject to inheritance tax rules in the UK.
In the likely event that you are still UK domiciled, inheritance tax will be owed on an estate which is valued at more than the inheritance tax threshold of £325,000 (£650,000 if your spouse’s/civil partner’s allowance is unused).
It’s worth considering that each country will also have different rules surrounding succession planning, so you should always seek advice about inheritance tax and estate planning – especially when living abroad.
To find out more about inheritance tax as an expat, our expat inheritance tax article explains everything in more detail.
I know about Inheritance Tax is, but what is generational inheritance tax and is generational inheritance tax avoidable?
As a British expat, unless you have changed your domicile you will still be liable for inheritance tax in the UK, as well as potentially inheritance tax in your country of residence.
Under normal circumstances if you are married and have children, the first person to die will leave their entire estate to their partner who will then pass everything to your children when they pass away.
As you are probably aware, for anybody who has an estate which passes the threshold for inheritance tax, this 40% tax on your estate when you die is inevitable.
However, what you may not be aware of is Generational Inheritance Tax.
What is Generational Inheritance Tax?
Generational Inheritance Tax is a scheme where money is taxed as it is inherited through the generations (i.e. when the money passes to your children’s children and so on).
In essence, this means that your children, and even your grandchildren, may be required to pay additional inheritance tax on money that you’ve already paid your 40% inheritance tax on.
This will normally be the case if you and your partner have mirror wills.
Assuming your children then make similar wills and leave everything to their children, your grandchildren will also pay tax on the same money.
This can mean that an estate may lose 60% of its original value through inheritance tax alone by the time it has been inherited by your grandchildren.
Preventing Generational Inheritance Tax
It is possible, however, to legitimately and legally avoid Generational Inheritance Tax through careful planning and by setting up a simple trust in conjunction with your will.
This will ensure that, while your estate will still be subject to an initial 40% inheritance tax, the HMRC will only get this bite of your children’s inheritance and protect the remainder.
There’s a lot of talk in the news about non-doms and tax avoidance. But what is a non-dom?
A non-dom is someone who lives in a country but does not have the same domicile as that country.
When you are born, you automatically become domicile in a particular country. Often this will be based on the country you were born in, but it is possible to inherit your domicile from your parents meaning you can be born in the UK, and still be a UK non-dom.
When evaluating your domicile, the government will consider a number of key factors including your permanent country of residence, your future intentions and even where you intend to be buried.
Changing your country of residence will not, on its own, be enough to change your domicile.
Non-dom status is important for many people as it would enable them to receive favourable tax treatment in their country of residence. At the moment, in the UK it is possible to pay money to maintain your non-dom status, which means you can avoid being treated as a tax resident, even if you meet the criteria under the Statutory Residence Test. This would mean that you do not have to pay tax on your worldwide earnings in the UK, only tax on your earnings in the UK.
I am a British national living abroad, or a UK expat, do I have to pay tax on my income and other financial assets?
There is often a belief that once you become an expat, no tax is due in the UK. However, this is often not the case and will depend on your own personal circumstances. In many cases tax can be due in both the UK and also your country of residence depending on where you earn your income and where your financial assets reside.
In all cases, the amount of tax that is owed in the UK and/or your country of residence will depend on where you are classed as a tax resident. In the UK, your residence status is established through the Statutory Residence Test and other countries will have different rules which will need to be established.
It is possible to live in another country, but also be considered a tax resident of the UK.
There may also be tax treaties between the UK and your country of residence which will establish what tax is owed to which Government and should help you avoid overpaying tax.
For example, if you live abroad, but earn an income from a rental property in the UK, that income is arising in the UK and is therefore subject to the UK tax rules.
This is just the tip of the iceberg when it comes to whether you need to pay tax as a UK expat.
As expat tax will invariably be a complicated matter with many factors to be taken into consideration, you should always seek advice from a qualified professional who has specialist expertise in non-resident matters. Failure to do so could result in overpayment of tax as well as significant penalties which could easily be avoided by seeking the right advice.
If you would like a free consultation to establish your tax situation, enter your details using the form on this page and we will arrange for a qualified expert from our network to contact you and set up a suitable time to speak.
I live and work abroad. What tax do I have to pay and to which government?
Typically, yes, you will still have to pay tax if you work abroad.
However, exactly what tax is required to be paid and to whom will depend on your tax residence status in your home country, country of residence as well as the tax rules in each country.
For example, if you are a British expat and are considered a non-resident of the UK for tax purposes, you will not be required to pay tax in the UK on income arising from work outside of the UK. However, you may still have to declare it, even if no tax is due.
If you are considered a non-resident of the UK, while you won’t have to pay tax on your income arising from your work abroad, you are likely to have to pay tax on your income in your country of residence.
For people who are classed as a tax resident of the UK, in most cases, tax will be due on income arising from work outside of the UK.
Your UK tax residence status is established with the Statutory Residence Test.
For non-British expats, you may also be required to pay tax on your income, irrespective of where it is earned.
Finally, it is important to investigate whether there is a tax treaty between your country of residence and your country of domicile which could provide you with tax relief if tax is due in both countries.
Typical complications and planning opportunities which arise and require specialist advice are often where:
- you are dual resident in the UK and another country, as you need to establish which country has the taxing right over the employment income and make tax treaty relief claims (if a treaty exists) via your tax return;
- you are an expat that has a UK employer but spend some of your time working overseas;
- you are resident in a country which does not have a tax treaty with the UK and spend some workdays in the UK;
- you have a UK employer and are on a UK contract, but spend all of your time working overseas;
- you left the UK to work overseas but have returned to the UK too soon to have become non-resident.
If you are unsure about your tax situation and what tax is owed where, request a free initial consultation with one of our qualified experts and you will be able to get the answers you are looking for.
I’m a British expat and no longer live in the UK, however I have to occasionally return home. How long do I have to be outside of the UK to avoid paying tax in the UK?
The amount of tax you are required to pay in the UK will depend on your UK tax residence status, as, in general, non-residents of the UK are generally only taxed on UK source income.
Your UK tax residence status is established through the Statutory Residence Test which incorporates a number of tests and factors when establishing whether you are a UK tax resident or not.
The Statutory Residence Test sets out a series of rules which determine if you are automatically non-resident or automatically resident.
For example, if you spend 183 or more days in the UK in any given tax year you will automatically be considered as a UK tax resident.
However, it is not conversely true that if you spend fewer than 183 days in the UK, you will automatically be classed as a UK non-resident.
If you are neither automatically resident or non-resident, other factors, classed as “ties” will also need to be taken into consideration.
A combination of your ties and the time you spend in the UK will ultimately determine your UK tax residence status.
We have created a comprehensive guide to the Statutory Residence Test which will give you an overview of the various tests, ties and time requirements which will establish your UK tax residence status.
However, this should not be used in isolation to help you determine your tax residence status and UK tax exposure, you should always seek qualified advice to ensure you know your tax requirements.
To assist, we offer a free initial consultation to help answer any general questions about your tax residence status. The consultation is conducted by an expert from our network and between 15 and 30 minutes.
I am spending some of this tax year working abroad and therefore I am not going to be a tax resident in the UK for the whole tax year. What is Split Tax Treatment, will it apply to me and how could I benefit from applying it?
Under the UK’s Statutory Residence Test, if you were deemed to be a tax resident for any given tax year, UK tax rules require you to apply UK tax rules to your worldwide income or gains.
If either you or your partner arrive or leave the UK during a tax year may be able to apply split year tax treatment to their situation and avoid paying tax in the UK on their worldwide income for the whole year, and only on the time that you were a tax resident in the UK.
This is particularly useful if the country you are moving to/from has a more favourable tax system than the UK as well as a double tax treaty with the UK – for example the UAE.
However, specific conditions have to be met for split year treatment to apply as highlighted below:
Split year treatment: conditions for UK leavers
The first three conditions specifically deal with people who were considered tax resident of the UK at the start of the tax year (i.e. on 6th April of any given year).
- Begin full time work outside the UK
- Your partner begins to work full time abroad and you join them
- You cease to have a home in the UK
Split year treatment: conditions for people arriving in the UK
If you begin the UK tax year as a non-resident, and were considered UK non-resident for the previous tax year and move to the UK during the tax year, you may be able to qualify for split year treatment using any of the following conditions.
- Begin working in the UK during the tax year
- You stopped working overseas, or are the partner of someone who stopped working overseas
- You establish a home in the UK
We have explained each of these conditions in more detail in our Split Year Treatment article. However, you will always need specialist advice from a tax consultant to determine if and how split year treatment could apply, including the implementation of the Statutory Residence Test to determine your UK tax residence status.
Request an initial free consultation
If you have left or arrived in the UK during the tax year and believe that you may benefit from split year treatment, we recommend requesting an initial free consultation with a tax consultant from our network to discuss your circumstances.
During this free initial 15-minute consultation the consultant will be able to listen to your case, answer any general questions and be able to provide an idea of whether you may benefit – however you may require further professional services to take full advantage.
In many cases, the key criteria for paying for any additional services is whether the tax savings will be sufficiently significant to cover any costs and earn you tax rebate. During the consultation, the consultant will be able to give you an approximation of whether this is worth pursuing and provide you with a fee quote for any services you may wish to take.
To request your free consultation, simply enter your details using the form and one of our team will select the most suitable tax consultant based on the information provided. We will then ask them to contact you directly to arrange a time to conduct your consultation.