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Arriving in the UK – Understanding your UK Tax obligations
Helping you to be compliant with UK tax rules
Firstly, welcome!
It will be no surprise that the UK tax authorities will be interested in your financial affairs. The first thing to be aware of is that the UK tax year runs from 6 April to the following 5 April, due to historic calendar reasons, and, if you need to file a UK tax return, this is submitted annually before 31 January following the tax year end. You may have two regular tax payments to make during a year – due 31 January and 31 July.
Tax Residence
It’s important to be aware that tax residence is not the same as immigration residence or citizenship.
UK tax resident individuals (generally) pay UK tax on their worldwide income and gains. Non-UK tax resident individuals (generally) pay UK tax only on UK-arising income and gains. So, you will have to determine whether you are UK-tax resident or not in the tax year in which you arrive in the UK. This can be done by consulting the Statutory Residence Test (SRT).
There is also a third option; you may be eligible to split your year into a UK-tax resident part and a non-UK tax resident part. You will have to check whether you meet the requirements for ‘split year treatment’. There are five cases under which you may split your year when you arrive in the UK and details on these can also be found in the SRT.
These conditions and rules are important as they will affect your income and capital gains tax treatment.
Administration and paperwork
If you will be employed by a UK company and have no other income, you may not need to submit tax returns, as your employer will withhold tax for you each month. You will need a national insurance number though (UK social security – https://www.gov.uk/apply-national-insurance-number/how-to-apply).
If you do need to submit a tax return (and you can check online if you do) you will need to let Her Majesty’s Revenue and Customs (HMRC) know by applying for a unique taxpayer reference number (UTR).
As a foreign national you may be eligible for a special tax regime – the ‘non-domiciled’ rules. This exempts you from paying UK tax on your foreign income and gains, provided you keep the funds out of the UK during your stay. This is administered through your annual tax return, with which we are very happy to assist.
If you sell an asset, you may also be subject to tax. If the asset sold is a UK property, there is a special tax return due within 60 days of the sale.
Other thoughts
If your stay is a short one, you may be exempted from UK tax through a Double Tax Agreement between the UK and your home country. You may also continue paying your home country’s social security, through the terms of a Reciprocal Agreement with the UK. This will depend on your specific circumstances, and we can help analyse this for you.
If your stay will be a long one (or a permanent one) this may affect your tax domicile and may make your worldwide assets subject to UK inheritance tax. There are actions you may be able to take pre-arrival to minimise this impact, for example through an offshore company or trust. You may also want to consider making a UK Will, so in the event of your death your assets go where and to whom you wish.
Finally, something you may not have thought of, do you already have a role with a trust or foreign company? A change in residence for an individual can have a (possibly unintended) knock-on effect on their tax position.
There can be more to consider than you first thought. We are happy to help make sure everything is considered, organised and well-structured for your future financial position in the UK, please contact us for advise.