If you're planning to leave the UK, there are several important tax considerations you need to be aware of. Understanding these issues will help you navigate the UK tax system and ensure compliance with HM Revenue and Customs (HMRC). In this blog post, we'll explore key topics such as UK tax residence, informing HMRC about your non-resident status, being a non-resident landlord, and how different types of income are taxed in the UK after you leave.
Tax Residency
Firstly, your UK tax position is primarily driven by your residence position for tax purposes. UK tax residence is based on the Statutory Residence Test (SRT), which considers factors such as the number of days spent in the UK, ties to the country, working patterns and access to accommodation. Determining your UK tax residence status can also depend on the double tax treaty with the country you move to.
This is a particularly complex area and it is highly recommended that you seek specialist expat tax advice.
Being a UK tax resident means you'll be liable to pay tax on your worldwide income, while non-residents are only taxed on their UK-sourced income.
When you decide to leave the UK, it's essential to inform HMRC about your non-resident status. You can do this by completing the P85 form unless you do a Self-Assessment tax return, in which case you report your residence status on the tax return. This ensures that you're correctly classified as a non-resident for tax purposes, preventing any unnecessary tax liabilities.
Non-Resident Landlords
If you're a non-resident landlord, you will need to be aware of the tax obligations associated with rental income. Non-UK residents with rental properties in the UK are subject to the Non-Resident Landlord (NRL) scheme. Under this scheme, tenants or letting agents must deduct basic rate tax from rental income and remit it to HMRC. Non-resident landlords can apply for approval to receive rental income without deduction of tax if they meet certain criteria.
Other Considerations
Finally, understanding how different types of income are taxed is crucial. Tax is applied differently depending on whether the income is from employment, self-employment, dividends, interest, rental & other various types of income, combined with your UK tax residency position and also whether any articles of the relevant double tax treaty apply.
In conclusion, navigating UK tax issues when leaving the country requires careful consideration and compliance with HMRC. Determining your tax residence status, informing HMRC about your non-resident status, understanding non-resident landlord obligations, and being aware of how different types of income are taxed are vital steps in managing your tax affairs when becoming a non-UK resident. Seeking expat tax advice is highly recommended to ensure you are both compliant and tax efficient when leaving the UK.
Contact Us
Please contact us to find out how the above applies in your circumstances and how you can reduce your tax liabilities and maximise your tax efficiency.
Please note that the above is for general information only and does not constitute financial or tax advice. You should not rely on this information to make or refrain from making any decisions. You should always obtain independent professional advice in respect of your own situation.
