Laurence

When planning to come to the UK, attention should be given to the possible tax consequences of  doing so. Careful planning could allow you to avoid exposure to UK tax and advice is available upon request. There are numerous issues for you to consider such as: Various other reasons may include short term project work, long term study or even international secondments to the UK for 2 years. Each case is almost unique and needs to be studied separately. If UK tax residence is established, tax will be assessable in the UK on worldwide income, unless those newly arriving in the UK of non-UK domicile can use the remittance basis of taxation. In this instance, the tax will be assessed only on the foreign income that is remitted to the UK. Some pre-planning points to consider: Beware of temporary non-residence anti-avoidance rules if returning to the UK after an insufficient amount of time away. Tax may be payable in the year of return on income and gains realised in the preceding years. Review the relevant double taxation treaty between the two countries. Employers should reconsider amending employment contracts where applicable to allow for the appropriate taxation rights. Couples should consider the tax efficiencies that might be available to them if one remains resident overseas while the other is in the UK. Whatever the change of circumstances, planning is always recommended and we are here to support you in the process.

When an individual taxpayer seeks to be deemed as non-UK resident there is SRT legislation in place to determine the number of days allowed in the UK per tax year as a non-UK resident. Those days however may be extended by a further 60 days where exceptional circumstances apply. Previously, HMRC have indicated that such circumstances should relate to the spouse or child only when related to a family matter. In a judgement released last month, however, it was ruled that exceptional circumstances would also be allowed for a twin sister whose overall wellbeing depended on the presence of her non-UK resident twin. This was despite the fact that these exceptional circumstances were required in the very first year of non-UK residence and which resulted in the loss of a large tax bill assessed by HMRC. There are instances where HMRC have taken a compassionate approach in terms of granting exceptional circumstances, but in this instance, and given the amount of tax involved, it may be considered that the extent of the compassion was suitably determined at a First Tier Tribunal level.

It has been a traumatic week for those of non-UK domicile living in the UK. With leaked info, of a personal nature, causing much soul-searching and consternation, at the same time there suddenly have been calls to for tax law to change. Those suggesting a time for change include academic professors as well as the journalists seeking to keep the issue on the front page of their newspapers. Ever since income tax was introduced, the concept of being non-UK domiciled has always been part of UK tax law, where unremitted foreign income can be excluded from UK tax assessments, subject to a charge being applied once deemed to be UK resident in at least 7 years out of a 9-year period. This concept still exists after more than 200 years and is available to those who do not intend to settle in the UK in the long term. While the taxpayer is alive, tax law as it exists seems to accept that there is always a possibility that the taxpayer will not remain permanently in the UK and allows for non-domicile status to remain until 15 out of a 17-year period of UK residence has occurred.The option to decline use of the remittance basis of taxation has always been a personal choice, but only now does it seem to be a political matter too. While the concept is clearly written in tax law, it will be interesting to see what policy changes will come about as a result of this week’s revelations. Lately, however, numerous leaks have been unable to initiate any change whatsoever and it would be a surprise to see change here. Whatever is decided, compliance will always be the objective.

Since April 6th 2020, property disposals by non-residents have to be declared online with a UK Property Disposal return, through HMRC’s UK property reporting service, within the current 60-day reporting deadline. Any capital gains tax assessed should also be paid within this same deadline. Reporting a property disposal requires a Government Gateway User ID and a need too for a ‘capital gains tax on UK property’ account to be created. For many non-residents, however, numerous issues prevent access to the Government Gateway and often there is a need to request HMRC to send a paper formatted return to the non-resident for completion and signature by ink, in the traditional format. This often proves to be a lengthy process and relies on an efficient postal service which impacts the 60-day reporting deadline. Once notified of the property disposal, either online or in paper format, HMRC will issue a payment reference number for use when arranging any settlement of the capital gains tax due. It is understood that HMRC will recognise the difficulties in meeting the 60-day deadline if the UK property charge has to be processed manually but it is recommended that you keep a log of the difficulties encountered and any discussions with HMRC in the event of any late filing or late payment penalties arising. When such difficulties are encountered, we often advise the client to phone HMRC to see if they will set up a capital gains tax on UK property account while on the phone. Occasionally this seems to work and although time-consuming it does avoid the need to file a paper return. If you do not have a Government Gateway ID set up, it is useful to start the process in advance of completing the property sale, given the 60-day filing deadline. Following the sale, if you have a need to file annual self-assessment tax returns, the disposal also needs to be declared on the tax return for the relevant year in which the sale occurred. But this is only the case where you have a need to file annual tax returns as a matter of routine. If there is ever a need to amend a UK Property Disposal return, before any self-assessment tax return has been filed declaring the disposal, this can be done either with a new property disposal form or arranged via the annual self-assessment tax return. However, amendments are often complex to arrange, especially if CGT has been overpaid, and may only be possible via the annual self-assessment tax return. Get in touch now if you have plans to dispose of UK property as a non-UK resident. HMRC recognise that the process can be completed much quicker with the support of a tax agent.

HMRC’s Let Property Campaign is a solution for those landlords who are not up to date with the annual tax returns required to declare income earned from rental property located in the UK. This requirement exists for all landlords regardless of the amount of income received and regardless of where they may reside, either in the UK or overseas. By making such a disclosure voluntarily through the let property campaign, there is the potential for late filing penalties to be lower than those which will arise if HMRC were to approach you directly about any outstanding tax declarations. Even if resident overseas and declaring the rental income in the country where you reside, the need to file a tax return in the UK remains. It would be our pleasure to assist you with this and help you stay up to date with your UK tax reporting obligations. If you are a foreigner in the UK with rental income arising overseas, this too must be reflected in an annual tax return and we would be happy to discuss the options available to you should the remittance basis of taxation be possible. Feel free to make contact should you have concerns about rental income and any overdue  reporting requirements.

Non-resident landlords receiving income from UK property, are obliged to file tax returns annually to declare the rental income received, less any typically associated costs incurred in generating the income. Basic rate tax relief is also available for any mortgage interest incurred. Such income will need to be declared in the country where investors reside but any tax paid in the UK will be offset against any tax assessed in the other country where permitted by the Double Taxation Agreement between both countries. The DTA may also permit entitlement to the annual tax free allowance, in which case investors will only be taxed on the net rental gain remaining after the tax free allowance has been taken in to account. It should be noted that from 6 April 2024, HMRC are changing their tax reporting requirements to quarterly reports throughout the tax year, in a digital format, following the success of the VAT reporting changes made recently, and this will apply to landlords who are in receipt of rental proceeds in excess of £10,000 per annum. When selling the UK property, each investor will be required to file a CGT return with HMRC within 60 days of the sale taking place to declare the gain and to pay any corresponding capital gains tax due. The chargeable gain will be assessed after taking typical buying and selling costs into account, including costs of a capital nature for home improvements and extensions. Where permitted, a tax free allowance for capital gains specifically will reduce the chargeable gain to be assessed for tax. Hodgens Global can provide you with the support needed to identify and assist with all relevant tax compliance and reporting matters to be addressed