Expatriation from the UK and Taxes: All You Need to Know

British expats are nowhere near exempt from the UK tax after moving abroad. A persons’ accountability for taxation in the UK depends on their tax residence and domicile status, income source, the situs of assets, and capital gains.

Here’s why the following are considered as necessary for UK taxes:

Residence status:

A UK resident is answerable for UK Income Tax and Capital Gains Tax. A non-resident is only charged taxes on the income, interest or saving derived from a source within the UK.

Disregarded income:

While non-residents are accountable to UK taxation regarding their UK income, it can be ignored for their disregarded income that comprises interests and dividends rather than the rental income. Meaning that the tax bill of a non-resident will not exceed the cumulative total of the withheld tax on the disregarded income in combination with what would have been the tax liability of the non-resident if disregarded income and allowances alongside the reliefs were ignored.

Capital gains tax:

While the general law for non-residents states that they’re not subject to UK tax regarding capital gains upon the disposal of their assets in the UK, there are three exceptions:

1. The anti-avoidance laws consider capital gains to be income that’s taxable even though they accrue to a non-resident.
2. In the year of their return, any person who has been a non-resident for less than five consecutive tax years shall be assessed for the gains realised during their absence on the assets they kept on the date of departure.
3. A non-resident person or trust trading within the United Kingdom through an agency or branch is liable for the properties used or retained by or for the trade or the agency or branch. The same rule applies to firms that are trading with a permanent establishment in the UK.

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