Expat taxation services are offered to expats who are living abroad on a temporary or permanent basis. Our client base has spanned countries including Canada, USA, Spain, Italy, France, Ireland, Denmark, Oman, UAE, Senegal, Hong Kong, Indonesia, Singapore, Malaysia, Australia and New Zealand.
Many former UK residents retain financial interests in the UK, be it in rental properties, share portfolios or limited companies registered in the UK. Consequently, expats can benefit from using a UK accountant in a number of scenarios:
1) Landlords
Upon moving overseas, many expats decide to hold on to their UK residence and to rent it to tenants. This rental income is subject to UK tax and as a result, UK tax returns need to be filed with HMRC.
When it comes to selling their UK residence after moving overseas, UK capital gains tax may be payable from the property sale. A non-UK resident capital gains tax form must be filed with HMRC, with the associated tax paid, within 60 days of the sale completion date.
2) Investments
When individuals move overseas permanently, they often decide after a few years overseas to dispose of their worldwide assets in order to simplify their finances.
Timing of asset disposals is key in order to maximise tax-free allowances. For example, it may be advantageous to sell a proportion of a UK share portfolio each year in order to utilise the annual tax-free capital gains tax allowances, rather than to sell the whole portfolio at once and incur a large tax bill.
This work also involves liaising with accountants in the overseas country who can advise the individual on the tax legislation in their resident country.
3) Inheritance tax when moving back to UK
An individual may have left the UK to live overseas permanently many years ago and acquired citizenship overseas. Decades later, they may decide to return to the UK permanently and wish to understand how their estate might be taxed upon their death.
Under UK inheritance tax legislation, once individuals move back to the UK permanently, they become UK residents once more and their worldwide estate becomes subject to UK inheritance tax considerations.
The main rate of UK inheritance tax is 40%, however there are allowances and reliefs available.
In recent years, there have been major developments in this area of HMRC legislation, particularly for individuals who were born in the UK, moved overseas and acquired another domicile and then become resident in the UK.
We would encourage anyone who is currently overseas and considering moving back to the UK permanently to get in touch. Being proactive in understanding the potential UK tax implications of their move back to the UK may lead to significant future tax savings.
4) Splitting the tax year when moving overseas
When an individual moves into or out of the UK, there is a possibility that their tax year will receive "split year treatment". Although they are an overseas citizen, for the period that they are resident in the UK, normally worldwide income is subject to UK tax, less broadly any tax paid overseas. If you leave the UK midway through a tax year, your UK tax will be based on income received in the UK up to the date of departure along with foreign income earned up to the date of departure.
These scenarios can get complicated very quickly, therefore please get in touch if you or your family have any queries relating to foreign income.
5) Tax residency status
Once an individual leaves the UK on a permanent basis, there are strict rules as to how many days can be spent in the UK in each tax year to preserve their non-UK resident tax status.
This upper limit of the number of days that can be spent in the UK depends on a number of factors, including an individual's employment situation overseas and on the number of ties they have to the UK via family and accommodation options.
Consideration is also given within HMRC guidance to exceptional circumstances.
For example, back in 2020 and 2021, due to the travel complications arising worldwide from the Covid-19 restrictions, a number of non-UK residents found themselves stuck in the UK for a prolonged period of time. We assisted a number of individuals in assessing and confirming their UK tax residency status as a result of Covid-19 lockdown measures and whose tax status may have changed due to their inability to return to their overseas home.
6) Review of double taxation treaties
When a UK citizen works overseas for a short period of time (weeks or months) and pays foreign tax on these overseas earnings, this income must also be reported to HMRC. Additional UK tax may be payable due to the fact that UK citizens are taxed in the UK on their worldwide income.
However, tax relief can be claimed against this 'double taxation' via a UK tax return, depending on the existence and nature of double taxation treaties between the UK and the overseas country.
Through a detailed review of double taxation treaties, we have advised many UK clients who work periodically overseas as to the tax relief available in the UK, saving thousands of pounds of potential double taxation.
