Going abroad or returning to UK? – you need tax residence advice!

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On 6 April 2013 the UK Government introduced a brand new set of tax rules governing UK tax for those who are not UK residence. Given the lack of rules previously and the difficulty for deciding a person’s residence in any cases which were not straightforward we all heaved a sigh of relief – the new rules are much more clear cut and certainty is good – right?

Having given residence advice to lots of people in different circumstances over the last six months my conclusion is that certainty is a two-edged sword. With good planning you can adapt your circumstances and be certain to achieve the desired result. However, with no planning a person may fail on just one criteria and be UK resident when they thought they were non-resident. And the new certainty means there is no wriggle room. If you innocently miss a key criteria you will end up with the wrong result and there will be nothing you can do about it afterwards.The year of arrival or departure can be especially complicated to get right. This can frankly be a disaster for a person working abroad in a low-tax or no-tax jurisdiction.

My conclusion is that every person leaving or arriving the UK should get individual advice.  Judging by the cases I’ve already worked on the cost of getting it wrong is usually a lot higher than the cost of advice.

Here are some of the common myths people working abroad hear on the grapevine…

Myth 1   So long as I stay out of the UK for 91 days I will definitely be non-resident

Myth 2   The day I leave the UK for a 2 year work posting abroad I will become non-resident

Myth 3    If you are not liable to tax in the UK you also won’t be liable to NI here

Myth 4    If you sell a UK property you will pay capital gains tax in the year of sale

Myth 5   Where you stay when you come to the UK has no effect on your residence

Myth 6   A terminal bonus relating to working abroad when non-resident won’t be taxed in the UK

Myth 7   If I arrive or leave an overseas posting mid way through a tax year I just split the year into residence/non-resident parts

Myth 8   Non-domiciled people don’t have any tax breaks any more

Myth 9    Working remotely on my laptop for a UK company in another country doesn’t have tax consequences

Myth 10  I work for the FCO so I am always UK resident even when abroad on overseas postings

If you thought any or all of these statements were true isn’t it time you checked out the facts? At Morgan Cameron we deal with well over 100 non-residents in around 40 different countries. We regularly advise expat workers but we can advise on unusual cases too – UK Government workers, remote workers, those working for International Organisations, retired people, those living interchangeably in two countries.

Not taking advice could be the most expensive decision you ever take.

Margaret

 

 

  • Judith Oakley

    Have lived in the US as a green card holder for 20 years and nor returning to the UK. Have sold the US house and planning on selling a house in the UK and by putting both monies together will be buying a larger house. What is th ruling on the money we get from the UK house re Capital Gains? In 2016 spent 5 months in the UK house. The UK house is valued at £250k.

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