British Expat Tax Advice

Summary: The jurisdiction in which a British expatriate resides together with their residence and domicile status all have a strong bearing on their overall taxation status - from how much they pay and to whom. But we appreciate that one of the trickiest and stickiest subjects to get a handle on when living abroad is taxation and it often becomes necessary to seek assistance.

The jurisdiction in which a British expatriate resides together with their residence and domicile status all have a strong bearing on their overall taxation status - from how much they pay and to whom.  But we appreciate that one of the trickiest and stickiest subjects to get a handle on when living abroad is taxation and it often becomes necessary to seek assistance.

British expat tax advice can be found locally or from international accountancy service providers back in the UK, but as an expatriate it’s important that you first understand the basics of your situation otherwise you won’t be able to tell whether the advice you’re being offered is actually correct!  This article is a guide to understanding your position as an expatriate from a taxation point of view.

Your Country of Residence

If you leave the UK with the intention of taking up residence in your new country you should act upon this intention and get in place any residence permits, visas or permissions as soon as possible otherwise you will still be deemed resident or ordinary resident in the UK and be subject to UK taxation on income and gains for a period of time after you have left the country.

The rules relating to residence in the UK are - you are still deemed UK resident if you spend more than 183 days of a tax year in the UK OR if you habitually spend more than 90 days in the UK per tax year - habitually means for a period of four or more years in this instance.

So, if you’re moving overseas with the intention of becoming resident in your new country, get your residency sorted out so that the UK tax man cannot be in any doubt about your intentions.  It is also possible to inform the Inland Revenue via a series of forms such as the P85 or P85(s) of the change in your status, start here: -

http://www.hmrc.gov.uk/worksheets/sa109-notes.pdf

Your Country of Domicile

Even if you become resident in another country the UK tax man can still get his hands on your worldwide estate for taxation at your death.  To escape UK inheritance tax you have to change your country of domicile and this is a very, very tricky thing to do!  On paper it seems simple - you have to prove your intent to remain in the country of your chosen domicile for life or indefinitely.  But how can you actually do that?  Well, you basically have to cut all ties with the UK; any money you have banked or invested should be withdrawn for example and if you hold property in the UK (even if you’ve always let it out) you may still be regarded as UK domiciled!  Really for the majority of people their country of domicile is only important at death because it is for inheritance tax reasons that a country ultimately wants to hold onto its citizens!  If you want advice about legally avoiding inheritance tax and all the options available to you, please contact us.

Your Local Taxation Status

For immediate income and gains taxation your country of residence is the key and you should check out the tax rates you can be liable for from your local tax office in your new country and also how you should report to them.  In most countries taxation is based on self-assessment, though if you take up employment overseas your employer may be required to deduct tax from your income at source.  It will be important to get your tax status registered and to get any work permits, tax numbers, social security or national insurance numbers or their equivalents as soon as possible when you begin working as well so that you are not taxed at emergency rates - which are usually the highest rates applicable!

Get as much information as you can from your local tax office, from other expatriates or off forums and expat internet sites before you relocate to help you understand how much taxation you may be subject to and how local laws and rules work in practice.

SHARE: del.icio.us   Digg   Facebook   Google   Mixx   NewsVine   StumbleUpon   Technorati   YahooMyWeb