Tax Planning When Leaving the UK
A departure consultation can assist in dealing with the various tax and social security issues arising from a move overseas. Issues covered by a consultation would include:
Non residence claims
One of the most important tax considerations when leaving the UK will be the potential for claiming non resident status. The key advantage in obtaining this status will be that only income arising from the UK (e.g. UK investment income and certain gains) will remain taxable in the UK. An individual who continues to be regarded as resident on the other hand, will remain liable to UK tax on worldwide income.
The claim for non resident tax status is made through the filing of the HM Revenue and Customs departure form P85. Under the Statutory Residence Test, individuals who are leaving the UK for employment purposes will be considered non resident if they remain outside of the UK for at least one complete UK tax year and do no breach certain limits regarding visits back to the UK for personal and work reasons. Individuals who wish to claim non resident status and are leaving for other purposes may have to meet one of the "ties" tests, which will limit the number of days they can spend back in the UK according to the number of "connection factors" they may have.
Individuals who leave the UK and successfully claim non resident status will often be able to claim a refund
of tax in the year of departure. The claim is made at the same time as filing HM Revenue and Customs departure form P85 and would be included as part of the departure consultation.
In addition to the filing of forms P85, individuals who continue to receive UK income may be requried to file self assessment tax returns for each tax year ending 5 April. We can discuss these matters with you and determine whether filing UK tax returns will be beneficial.
For individuals who will be receiving UK rental income whilst overseas, an additional form known as an NRL1 should be filed with the Inland Revenue for application of the Non Resident Landlord's Scheme. Without this approval, agents or tenants will be required to deduct basic rate tax from rent paid and submit this to HM Revenue and Customs on a quarterly basis. In many cases, letting agents will take care of the filing of these forms. If not, we will complete and submit the form as part of the departure consultation.
For further information, please contact Richard Watts-Joyce CTA
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