PERSONAL TAX RETURN

Award Winning,
London-Based
Tax Immigration Advisors

UK Taxation for non-UK residents 

Any income obtained from the UK, apart from disregarded income, is subject to UK income tax for non-UK tax residents. Any money earned outside of the United Kingdom is not subject to UK income tax.

On the sale of certain assets, including UK residential property, non-UK tax residents are subject to UK capital gains tax. 

Living abroad and Statutory Residence Test 

Individuals who meet certain criteria under the Statutory Residence Test are deemed non-UK tax residents (SRT). 

To evaluate residency, the SRT uses a number of tests and considers a taxpayer’s individual ties to the UK, as well as the number of days they spend in the UK both working and not working. 

Individuals are only allowed to spend a particular number of days in the UK before they are declared UK tax residents. If you plan to spend a significant amount of time in the UK, you should seek advice to avoid being designated a UK resident for tax purposes. 

Even if you live outside the UK, you may be required to file a tax return for a variety of reasons. 

For instance, if you:  

  • become a company director for a UK firm and are paid for your services;  
  • begin to receive income from land and property in the UK; or  
  • sell property or other assets subject to UK capital gains tax. 

If you have been issued a tax return by the UK tax authorities and you have UK sources of taxable income or chargeable capital gains, you must complete it and supply details. 

If you need to file a tax return to record taxable income or profits but haven’t received one, you must notify the UK tax authorities by the 5th of October following the tax year’s end (UK tax year ends on 5 April ). 

Personal tax return and owning a rental property 

Any rental income earned from a property in the United Kingdom is taxable in the United Kingdom. By default, the tenant or rental agent is responsible for deducting and paying any applicable taxes at source to the UK tax authorities. Each tax year, the landlord must prepare a UK Self-Assessment tax return to balance their tax situation. 

Even if the property is in a net loss position, the landlord should file a tax return to disclose any income or costs for the tax year. 

For more information, please see Tax on Rental income for Non-residents or seek a professional tax advice at us. 

Foreign income and UK tax 

Any time spent working in the United Kingdom is considered income earned in the United Kingdom. To establish if any amount is taxable, several elements must be considered. For this reason, a workday is defined as a day in which you work for three hours or more. 

For more information please see Overseas Work Relief or seek a professional Tax Advice at us. 

Tax return filing deadlines 

The deadline to file your UK tax return is the 31st of October after the end of the tax year (8 April — 5 April), or the 31st of January if filing electronically. 

The filing date for the 2021/22 UK tax year is 31 October 2022 for paper returns and 31 January 2023 for electronic forms. 

 Who need to submit the tax return? 

Late tax payments will be subject to additional fines and interest. 

According to the UK legislation, you likely must send a tax return if you are  

  • Self-employed 
  • A partner in a business partnership. 
  • A landlord 
  • Receive foreign income 
  • Receive income from savings, investments and dividends of more than £10,000 per year. 
  • Claim some income tax reliefs 
  • If you earned more than £100,000 during tax year.  

Many taxpayers find it difficult to navigate complex tax returns and complete them correctly. Current changes in tax law mean that taxpayers risk more penalties for late or incorrect filing of their returns. 

We will make all the necessary calculations, contact the UK Tax Authorities and send your declaration. 

We also offer tips on how to minimize your tax liability when filing your tax return. We will advise on eligibility for grants for self-employed as well as for other tax reliefs 

We can also offer you an investigation protection insurance to protect you from the UK Tax Authorities’ tax investigations and make better financial decisions. 

Expat Ltd is one of the leading UK tax consultants and could advise you on whether you must complete a tax return. Furthermore, we could file you it for you with the UK Tax Authorities and support you throughout the process.  

Remittance Calculation 

The Remittance Basis is available to non-domiciled individuals. This permits income and earnings from foreign sources to be generated outside of the UK but only be taxed in the UK to the degree that they are remitted here. Expat Ltd, on the other hand, may advise on remittance planning, which ensures that sources are divided so that the least taxable monies are sent first, followed by the more heavily taxed remittances. 

Money in bank accounts can come from a variety of places, including salary, dividends, and proceeds from property transactions. If money is imported into the UK through a mixed fund bank account, the UK Tax Authorities follows rigorous ordering rules and taxes the different sources at separate rates. Clean capital is foreign income or gains obtained before arriving in the UK that are not taxable if repatriated to the UK. Clean capital can also come through gifts or inheritances.  

What is deemed remitted to the UK 

There are 5 ways that the foreign income and gains are “remitted to the UK”: 

  • brought to the UK by you/ another relevant person. 
  • brought for your benefit/ that of another. 
  • used to pay for a service provided in the UK to you. 
  • used outside the UK for a relevant debt in the UK. 
  • remittance will occur from you remitting both the actual/original foreign income and gains as well as remitting something that derives from the to the UK. 

There are some remittances that will use additional rules. An example of this is when you gift some of your income to somebody abroad. There is still a possibility that this is remitted as well, as it will benefit the respective person. 

Your money/property doesn’t have to be within the UK to also receive remittance. It could be money you received from another UK resident whilst being resided here, in return for money/assets representing your foreign income and gains transferred to them abroad. 

Deciding what you have remitted 

If a single amount of income has been deposited it’s easier to identify what has been remitted. However, you might’ve a remittance from a mixed fund, if you don’t fund this way. 

Remittances from a Mixed Fund 

Mixed Fund: “is a fund of money or other property which contains more than one type of income or capital and/or income or capital from more than one tax year”. An example is a bank account that receives money from a range of sources e.g. яяincome, bank interest, dividends and earnings, or some form of capital has been paid. 

By purchasing an asset from abroad, the asset could also be defined as a mixed fund eg a car. 

Cleansing of Mixed Funds 

First make sure to identify the type of your mixed fund, then you can cleanse it from using offshore accounts. The main condition with offshoring is that it has to convert to monetary values, thus cleansing mixed fund assets is harder. 

Records of the transferred mixed funds would be required. 

Our team has a lot of experience analysing the many sources that go into any mixed monies that have been submitted. We can figure out how much has been remitted and how much is subject to tax. However, if an overseas bank account is used frequently, the administrative and professional costs of conducting such an analysis on each transaction can easily outweigh the UK tax on the remittance. As a result, before remitting payments in the future, we might offer to manage your financial affairs. We can assist you in separating the various streams of your income into separate bank accounts so that you pay the least amount of tax possible when bringing money into the UK. 

Because of the UK’s complicated tax laws, we commonly find that clients are unaware that using a credit card issued outside the UK to buy goods or services in the UK and paying the credit card bill with foreign income or gains produces a taxable remittance. The amount of tax payable can be significantly reduced by using credit cards purchased from clean capital accounts. As a result, we cannot overstate the need of setting up segregated bank accounts for remittances well before becoming a tax resident in order to be able to establish the clean nature of your remittances.