The Expat Directory

Expat Frequently Asked Questions

Click on any of the questions below to reveal the answer.

• » How do I work out if I am resident in the UK?

  In order to be liable to UK income tax, an individual must either be resident in the UK or else have a source of income derived from the UK.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 over the last four years. (You may ignore some days spent in the UK, for example, dealing with family bereavement)
  •  From 6th April 2008 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. Prior to 6th April 2008 both days of arrival in and departure from the UK were ignored.
  • 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

• » What is Domicile?

  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.

• » What is my residence status in years of arrival or departure from the UK?

  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
  As stated above, individuals who came to the UK with the intention of remaining in the UK for at least two years but who had no clear intention of remaining in the UK for at least 3 years, would have been regarded at not ordinarily resident form the date of their arrival. They would remain Resident & Not Ordinarily Resident until the beginning of the UK tax year following the third anniversary of their arrival unless they formed an intention to remain in the UK for a period of at least 3 years prior to this date.
  
  HMRC 6 which replaces IR 20 with effect from 6 April 2009, confirms a change in approach. It now states that 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.
  
  This is an important change as this reduces by one year the period that relevant individuals will be able to claim "Overseas Workday" relief in respect of earnings attributable to any duties performed outside the UK.

• » What happens if I am only temporarily absent from the UK in full time employment abroad?

  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.

• » What happens if I rent a property in the UK while I am overseas?

  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.

• » What is the deadline for submitting my self assessment return?

  31st October is the deadline for submitting a paper return.
  
  31st January is the final deadline for submitting your return online.

• » What happens if I do not fill my return in on time?

  You will be fined a £100 late filing penalty. A further £100 penalty is charged six months after the deadline if your return is still not filed. The Revenue can also request daily penalties of up to £60 per day.
  
  The £100 late filing penalty may be reduced if your tax liability for the year is less than £100. However, the daily penalties will remain due irrespective of your final liability.

• » Do I need to advise HMRC if I am leaving the UK?

  You will need to notify HMRC of your departure from the UK 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.

• » What about if I am returning to the UK?

  Again, HMRC will need to be informed of your arrival and there are specific forms to be completed. These will ensure that any UK income is taxed correctly according to your circumstances.

• » How are earnings taxed in the UK?

  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.

• » What is Remittance basis?

  UK residents are normally liable to UK tax on the whole of their worldwide income arising and gains accruing in a tax year - the arising basis. The remittance basis is available to UK resident individuals who are not domiciled here or not ordinarily resident. It provides for foreign sourced income (including republic of Ireland) and gains to be charged to tax by reference to the extent to which they are remitted to or receive in the UK.

  
  Where remittance basis applies it allows the taxpayer to defer tax on income or gains that have arisen until amounts in respect of the income or gains are received in the UK. There is no time limit between the income or gains arising and the receipt in the UK.
  The remittance basis is available on relevant foreign income, employment income and capital gains.

  
  It is up to UK individuals who are UK resident but not domiciled or not ordinarily resident to decide whether they wish to be taxed on remittance basis for each tax year. Those eligible will be able to choose from one tax year to another whether they wish to be taxed on this basis.
  This will not apply to those whose un-remitted income and/or gains for a tax year are less than £2000. They will be taxed on remittance basis for that year automatically without the need for a claim.

  
  Personal allowances
  Under the new legislation those who make a claim to be taxed on the remittance basis (S809b) will lose their entitlement to various personal tax allowances. For income tax purposes this will include, personal allowance, blind person's allowance, tax reductions for married couples and civil partners and payments for life insurance and for CGT the annual exemptions.

  
  This does not apply to individuals who are eligible to use the remittance basis without a claim in a tax year because their un-remitted income/gains for a tax year are less than £2000 (S809c). They retain their entitlement to all these various allowances and reliefs.