UK Tax Compliance

These are various actions you need to do or consider when moving abroad or to the UK. The following highlight some of the more common areas you need to consider.

Tax Forms

If you arrive in or leave the UK, you will need to inform the Revenue of your arrival or departure, although it may no longer be necessary to complete arrival or departure tax forms.  This will depend on your circumstances,  however,  if HM Revenue and Customs (HMRC) do request you to complete one of thes forms, great care is needed when completing these forms, as they will determine how HMRC will tax you in the UK. It is easy to make a mistake on these forms, as the questions appear harmless, however, an innocent mistake can cause you to pay tax unnecessarily in the UK and many people get it wrong to their cost.

It is advisable to seek professional guidance when completing these forms.

When arriving in the UK, you will need to register for self-assessment, which is the UK's tax return system.

Social Security

If you are seconded to an EEA (European Economic Area) country or you are an EEA national seconded to the UK, you may be eligible to remain in your home country social security system (NIC in the UK). Your employer must apply for this.

Similarly, if you are seconded from or to a country with whom the UK has a Reciprocal Agreement for social security purposes, an appropriate certificate will need to be applied for by your employer if you wish to remain in your home country system.

These certificates will only last for a specific time.

If you require a National Insurance number in the UK, then you will need to apply for one by phone once you arrive in the UK.  You may then need to arrange an interview with your local Job Centre in the UK.

If you normally live in the UK and have moved overseas, then you need to consider whether you want to pay voluntary national insurance contributions (NIC) to protect your State Pension.

Tax Returns

Regardless of whether you are moving to or from the UK, it is highly likely you will need to file a UK self-assessment tax return. Tax returns for expatriates are often more complicated than most UK residents' returns, especially if you are tax equalised, and/or claiming the various tax reliefs to which expatriates are entitled. Professional assistance is therefore advisable.

The deadline for filing your return is the 31 January following the tax year in question if you are filing your return online, otherwise it is 31 October following the relevant tax year. Any tax which is due, will need to be paid by 31 January.

There are hefty penalties for the late filing of your return e.g. if a return is over 12 months late the minimum penalty will be GBP1,600 even if it is a nil return and no tax is due.  Interest will be charged on a daily basis on any outstanding tax after 31 January, together with penalties for the late payment of tax at a rate of 5% of the tax due.

It is currently the case that you cannot file the "Residence, Remittance Basis etc." pages using the Revenue's tax return filing service on their website.  You need to file these pages if you are non-resident and want to claim this along with your personal allowance and also if you wish to claim relief for any double tax situation you may be in.  Equally, if you are a foreign domicile who has moved to the UK, you will need to complete these pages if you wish to claim non-domicile status and/or the remittance basis of taxing your overseas income and gains and also if you wish to claim relief for any double taxation .  For both individuals coming to or leaving the UK, it is on these pages you claim split year treatment, if applicable, for the years of your departure from or arrival to the UK.  To complete these pages you either have to use a professional adviser who has the appropriate tax return software such as UK Expat or purchase commercial software that has these pages.  It really is not advisable to ignore filing these pages.

Rental Income

If you are a Brit moving overseas and are renting out your home while you are away, be aware that this income will remain taxable in the UK and your tenant or your letting agent will need to deduct basic rate tax from your rental income. In order to avoid this tax being deducted at source, an application can be made to have the income paid gross, however, certain conditions need to be satisfied otherwise HM Revenue & Customs may turn down your application. Remember, this application is only to stop tax being deducted from your rental income. If tax is due on this income, you still need to pay this over via your self-assessment tax return.

The above also applies to any foreign nationals who purchase property in the UK, which they then rent out once they leave the UK.

UK Pensions

If you leave the UK and are in receipt of a UK pension, UK tax will continue to be deducted from your pension, however, depending on which country you are living in, it may be possible to apply for your pension to be paid gross.

Other income

If you have income which is taxed in both your home/host country and the UK, then the taxation of some types of income such as earnings, royalties, dividends, interest, rental income, pensions etc is deteremined by double tax treaties the UK has with numerous countries around the world.  These agreements may exempt or partially exempt some types of income from one country's tax, however, you need to look at the specific agreement relevant to your situation, as each double tax agreement is different.  If you are exempt from tax or pay a reduced rate of tax in the UK, then you need to claim this relief on your UK tax return.  You may also want to consider applying for relief to be given at source in the future.  Again, a specific tax form needs to be completed.

Other Tax Forms

 If you have arrived in the UK on assignment, it is very likely tax will be withheld at source by your employer (or whoever you are assigned to in the UK) under the PAYE (Pay As You Earn) system.

This will mean that near the end of the tax year you will receive a P60 form showing how much you have been paid during the tax year and the amount of UK tax and NIC (National Insurance Contribution) that has been deducted from your salary, where applicable. Keep this form safe, as you will need it for the completion of your UK tax return.

You may also receive a form from your employer called a P11D. This form shows the benefits in kind your employer has provided you with during the tax year. Again, keep this form in a safe place as you will need it for the completion of your tax return.

A P2 form shows your tax code for the PAYE system. Check this code carefully to ensure that the correct tax is being deducted from your salary. Very often when someone arrives in the UK, not enough tax is deducted under PAYE resulting in a large underpayment, which needs to be paid by the tax return deadline of 31 January. This can cause cash flow problems, if you leave the filing of your tax return to the last minute.

During the year, you will receive Statements of Account from the Revenue, which will show the movement on your tax account.

A word of warning

Don't fall into the trap of thinking that once you leave the UK,  the UK taxman will not be able to track you down. The Revenue now liases with tax authorities around the world and exchanges appropriate information, therefore, the chances of being caught are now much higher.

If you need any help completing or understanding the above forms, then contact UK Expat and we will be happy to help.

We can help you with the completion of your UK tax returns and assist you with the various tax forms HM Revenue & Customs require.

Contact UK Expat today to discuss your tax compliance needs.