Am I non-resident for UK tax purposes
There are a number or rules which dictate whether UK nationals are non-resident for tax purposes.
You are considered a UK tax resident if you are present in the United Kingdom for 183 days or more in any tax year (starting April 6) or are present in the UK for an average of 91 days or more per year, over a period of up to four years. The HMRC website states that for visits to the UK “days of arrival and departure are not normally counted as days spent in the UK”, however there have been cases where HMRC challenges its own rule in court and wins! It is sensible to keep well-within the rules above and take advice from an experienced advisor.
Even if you are deemed to be non-resident you may still be liable to pay tax on UK-source income.
Double Taxation Agreements
Some expats who earn a salary in one country and have investment income in another may potentially be subject to tax in both countries. To avoid double taxation, the UK has negotiated double taxation agreements with more than 100 other countries. If you are a tax resident of one of these countries you should be able to claim an exemption from UK tax on some or all of your UK income.
Interest on deposits with UK banks and building societies is taxed at source and expats are advised to provide their bank with a ‘not ordinarily resident declaration’ form, or move the funds to an offshore bank.
Capital gains
Unless you are offshore for five full tax years or more, you are likely to be liable for tax on any capital gains while you are abroad even if you are non-resident.
Inheritance tax
Tax residency is not the same as where you are domiciled. In general, if you are born in the United Kingdom you will remain domiciled there are will pay inheritance tax to the UK Government even if living abroad and are non-resident.
The rules dictating tax and residency are complex and expats are strongly advised to take tax advice from professionals in both the UK and their country of residence before making important decisions.
