Expats

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.

Residence

• You are UK resident in any year in which you spend more than 183 days in the UK.
• You are resident if you are regularly in the UK for more than 91 days. HMRC consider each year and the average number of days spent in the UK . (You may ignore some days spent in the UK, for example, dealing with family bereavement)
• Each day that an individual is physically present in the UK at midnight will be counted as a UK day, therefore days of departure are not counted.
• You may be treated as being UK resident if you owned or leased accommodation in the UK for three years or more.
•  You are resident if, when you came to the UK, you intended to remain for two years or more.
•  You can be resident in another country at the same time as being resident in the UK

Ordinary Residence

• There is no legal definition of Ordinary resident.
•  Broadly it denotes more permanent residence that the term "resident" (above).
• If you are resident year after year you are "ordinarily resident".
• In any year you may be ordinarily resident but not resident, or
• In any year you may be resident without being ordinarily resident If you have already lived in the UK for three years or more, then you would normally be regarded as ordinarily resident.
• If you have lived in the UK for less than that it does not mean that you are not ordinarily resident, an individual can become ordinarily resident from the first day they arrive in the UK

There are many tests for Domicile and there is no legal definition.

• You cannot be without a domicile
• You can only have one domicile at a time
• Your existing domicile will continue until you can prove you have another one
• You normally acquire your domicile of origin from your father, it need not be the country in which you were born
• Your domicile of origin can be replaced by your domicile of choice. This will be the country in which you live if you can show that you intend to stay there.
• Other factors in determining a domicile of choice will include your intentions, your business interests, your social and family interests, your ownership of property, the form of the Will that you have made.
• You will have difficulty in displacing a domicile of choice after living in the UK for seventeen years.

Residence
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.

Ordinary residence
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.

• Day one (1 Feb unless return issued late) - £100 late filing penalty.
• 3 months (1 May unless return issued late) - An additional £10 per day charge for up to 90 days. A maximum of £900 plus the £100 from Day one.
• 6 months (1 August unless return issued late) - A further £300 penalty or 5% of the tax due, whichever is the greater.
• 12 months (The following 1 Feb unless return issued late) - A further £300 penalty or 5% of the tax due, whichever is the greater. In serious cases you may be asked to pay up to 100% of the tax due as a penalty.

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.