Tax Advice for UK Outbound Persons
If you work or live in the UK, there are compliance issues that may arise if you travel out of the country. Also, corporates that expand in and out of the UK need to comply with tax requirements. At Hammersmith Chartered Accountants, we have the expertise and the experience required. We will ensure that you remain compliant. It does not matter whether you are an individual or a corporation. We manage and streamline compliance obligations. This is intended to enable you to focus on the core of your business.
Residents Leaving the UK
If you reside in the UK and decide to leave the country, you will be faced with many tax issues. So you must ensure that your tax status is okay at the time you leave. Several questions may need to be answered to help you decide what you need to do. For instance, you need to know the type of taxes you should pay when you move abroad. Also, the question of whether you will be taxed in both the UK and your host country needs to be answered. Besides, you need to know whether you should pay Voluntary National Insurance or not.
Important Things to Consider
- Immigration tax structure
- The dates of departure and arrival in your host country
- Informing HMRC when you leave
- Informing the tax authority of the new country of your arrival
It is critical to note that you must inform HMRC when going abroad. However, doing this does not absolve you from tax responsibility. Certain individuals will still need to pay Tax even when they move to a foreign country. Also what you will be doing in your new country is vital when determining the tax you may need to pay. So liaising with Hammersmith Chartered Accountants could be of help. We will keep you updated on your new obligations and what needs to be done.
Other Issues You May Need Advice On
National Insurance- you are under no obligation to remit payments to the National Insurance when you move to another country. But it may be necessary that you make voluntary contributions in a case where you plan to return to the United Kingdom in the future. Also, a person to wants to retain the UK state pension entitlement must continue making voluntary contributions.
Note that when you leave the UK and decide to live abroad, you will pay tax on any earnings you make in the UK. For instance, UK capital gains and income on the United Kingdom-based asset will be taxed. Also, you will need to pay tax on any UK inheritance.
In some cases, you may be taxed in the two countries. It all depends on several factors and the country involved. But generally, a non-resident will only be taxed on any UK income in the UK and the new country.
Migrants Who Have Been Living In the UK
The UK law considers a person a resident if they live in the country for a certain number of days in a year. But if you have been in the UK for some time and migrate to a foreign country, you may apply to have the tax year split. It can be divided into the overseas and UK part. This is referred to as the split year rule. It allows HMRC to treat you as a non-resident for the time you will be away. It implies HMRC will only tax the migrants on the UK sourced income. And you will be treated as a non-resident for the duration you will be away.
People Who Don’t Complete a Tax Return
A person who does not fill the self-assessment tax return when leaving the United Kingdom must complete form P85. Also, people who were initially employed in the United Kingdom need to send part2 and 3 of P45 form to the HMRC. The form will be given by the former employer. It should be accompanied by form P85 which can be filled and submitted to HRMC online.
Individuals who do not file tax return may need to consider doing so once they leave the UK. If such people will receive income sourced from the UK, they must complete the tax returns. The income may include rent on property situated in the UK
Migrants who have overpaid tax are entitled to a tax refund.To qualify for the refund, they must fill form P85. For individuals who are in the United Kingdom for a short period, they must fill form R43. It allows HMRC to process a tax refund.
HMRC uses P45 to calculate the tax refund due. Also, they use the tax figures supplied to calculate the refund due. It is immaterial whether you will be returning to the UK soon or later. If other incomes may affect your tax position towards the end of the year, it may be necessary that you file the tax returns. If HMRC issues a tax refund, treat it as an interim refund. The reason is that if the overall position at the end of the year demands that you pay more tax, you will refund the money
For individuals who fill a self-Assessment form, they don’t need to complete form P85. Instead, they will be required to just fill the self-Assessment Tax return. HMRC will calculate the tax return due.
If you will be leaving the UK for an indefinite period, entering the date you depart from the UK in the forms is important. Also, if you are leaving the UK permanently, you need to inform HMRC so that they desist from sending you tax returns forms. For individuals that were self- employed, but who ceased being self-employed the case is different. They should enter the date they ceased being in self-employment.
But if you will be returning to the United Kingdom in future or you intend to continue receiving the United Kingdom sourced income, let your assessment records remain open. However, these are all complicated issues that require input from experts. Hammersmith Chartered Accountants will be by your side to offer you professional advice.
How National Insurance Work For Migrants
Whether you should continue paying National Insurance or not is dependent on many factors. It depends on whether you plan to return and live in the UK and claim the state pension. If you will be coming back, it is necessary that you continue paying the contributions. If you lived in the United Kingdom for three consecutive years, you may opt to pay the voluntary National Insurance contributions.
UK citizens working abroad
UK citizens working abroad face a myriad of challenges on personal tax liability. There are international tax systems determined by law or other relevant treaty agreements. The treaties are signed by the UK and other countries that must be followed.
A person is considered a UK resident if they spend 183 days in the United Kingdom. Such a person will need to pay tax in the UK. The days must not be continues. They may also include several days spent away from overseas employment. Or even days on business or private visits to the UK.
A worker who is not a UK resident and offers their services in countries other than the UK have no tax liability in the United Kingdom. But the country in which the worker lives may require that they pay tax on earnings sourced in that country. Also, an employee who spends days working on projects in many countries in the 365 days has no UK tax liability. But such persons may need to pay taxes imposed and calculated by the foreign country.
UK Residence Status
The status may be reviewed based on the following facts:
- The duration of the contract
- The period the person was absent abroad
- Indented return visits to the UK. It may include annual leave, rest days, sick leaves, public holiday and parenting leave.
Note that documents such as travel invoices, expenses, and timesheets are critical. They should be kept and used to support claims on residence status. HMRC relies on RDR1 for guidance on UK non-residents and residents.
From this discussion, it is clear that the determination and payment of tax by UK migrants is complex. It, thus, requires advice from experts. They can help you make decisions without risking hefty penalties. This is why you need to contact Hammersmith Chartered Accountants.