Below are the most common questions we have been asked regarding tax and accountancy. If you cannot find the answer you are looking for, please click here to contact us directly.
Generally, if an individual is resident in the UK, he is taxable in the UK on his worldwide income wherever it arises; a non UK resident will however, only be liable on his UK income.It is therefore important to establish the meaning of residence.
There are many tests for Domicile and there is no legal definition.
An individual who comes to the UK to take up employment that is expected to last for at least two years will be regarded as resident only from the date of his arrival.
An individual arriving in the UK for a period expected to last less than two years "especially if he only lives in temporary furnished accommodation" will only be regarded as resident in the UK in any tax year in which he spends more than 182 days in the UK.
An individual leaving the UK permanently or taking up full time employment abroad will only be deemed to be resident up to the date of his departure.
Individuals who have been regarded as Resident & Not Ordinarily Resident and who are still in the UK on the day after their third anniversary of their arrival, will be regarded as Resident & Ordinarily Resident from the beginning of the UK tax year in which the third anniversary of their arrival falls.
If an individual leaves the UK to take up a full time employment overseas then providing the absence for the employment includes a complete tax year the individual is by ESC A11, treated as not resident and not ordinarily resident from departure until return. Visits to the UK during such a period must not break either the 183 day or the 91 day average rules.
If you are a non-resident landlord you must pay UK income tax on your UK rental income. You should also be aware that your tenant or your letting agent will need to deduct basic rate tax from your rental income. However by completing the relevant form and submitting this to HMRC you can obtain exemption from this, subject to certain conditions being met. Please be aware though that this application is only to stop tax being deducted at source from your rental income. If you are still liable to UK tax on this income, you will still need to pay this to HMRC via your self-assessment tax return.
31st October is the deadline for submitting a paper return.
31st January is the final deadline for submitting your return online.
You will be fined as follows for late filing of your return.
In total if you file your return more than 12 months late, you will be looking at a minimum of £1600 in penalties. In prior years these penalties could be avoided if you made the payment of tax due by the deadline date or if your final tax liability was a refund of tax. However, this is no longer the case and the penalties will apply regardless. It is therefore extremely important to ensure your tax return is filed on time.
When leaving the UK you will need to notify HMRC of your departure and what your future intentions are. There are various forms that you may need to complete depending on your circumstances. This will enable them to determine your residence status and how any future liabilities will be calculated.
Your earnings are taxed in the UK depending on your residence and domicile status. You should be aware that all earnings in the UK will be taxed in the UK regardless of whether you are regarded as resident or not unless the work undertaken is incidental to your work overseas.
If you are resident in the UK, you will be taxed in the UK on all your worldwide earnings.
There are occasions when you may be able to get tax relief on overseas workdays. However you should be aware that there are a number of important conditions which need to be met. In particular, you must not remit these earnings to the UK otherwise they will become taxable.
Tax is usually payable by UK residents on worldwide income. This does not always apply to individuals classed as not domiciled here. In these cases, tax is only due on foreign income when it is actually brought into the UK. Individuals who are taxed on a remittance basis will in general lose entitlement to personal allowances and capital gains tax annual exemption. This is subject to a de minimis level of £2000. Those choosing to be taxed on this basis and who have been UK resident for longer than 7 of the past 10 years will be required to pay a £30000 charge.
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