New legislation that was introduced on 6th April 2013 will mean that UK tax payers leaving the country may still have to pay tax for the year or part of the year. The new rules relate to anybody who earns an income from the UK within any one tax year if they own property or are resident for more than 183 days a year.
The previous law had been much more simple to follow. If you left the UK to domicile or work in another country for a period that exceeds three years, you were considered a non-UK resident the day after departure and this not subject to pay UK tax to HMRC. The new rule says you have to pay tax on gains earned in the UK for the entire tax year. However, you can apply to HMRC for a concession on a split year if you leave within the first six months of the tax year – thus between April and October.
If you do not inform HMRC of your decision to leave the country they will still treat you as a UK resident thus you will be subject to tax. Likewise, if your return to the UK exceed 183 days in any one tax year and you earn an income during your time in the UK, you are liable for HMRC tax duties.
Working in another country means you are exempt from UK tax laws providing you do not reside in the domiciles of England, Scotland, Wales or Northern Ireland in the same time periods outlined above. Before departing the UK you should fill in a P85 and lodge it with HMRC.
Form P85 discloses any continuing UK sources of income so that HMRC can determine whether you have to file a Self Assessment Tax Return even though you live overseas. Tax payments for ex-pat resident in other countries may still be subject to tax liabilities if you receive an income from UK sources as follows:
Pensions – Non-UK residents in receipt of a UK pension will continue to pay income tax on that pension. You may also be required to pay tax if the country you are moving to has a double taxation treaty with the UK. If this is the case you may be able to apply for relief from UK tax, but this will depend on the terms of the double tax treaty. Where income tax has already been deducted from earlier pension payments, you should be entitled to claim a tax repayment under the double tax treaties.
Rent – Landlords that live overseas but receive rent on UK property they lease out are subject to specially complicated tax laws. The tenant or third party agent is required to deduct the basic tax rate from the rent and pay the balance to HMRC – the net rent is effectively paid by the landlord. A simpler option using this method is for the third party agent to apply to HMRC for a non-resident landlord scheme and the tax man will do the calculation on your behalf.
If you are a non-UK resident or thinking of moving abroad to live or work, it is advisable for you to get professional tax advice. Contact Taxaccolega, a low fixed fee accountant, now by emailing firstname.lastname@example.org or calling our free phone number on 08000 235 234.