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Departing the UK – is everything in order?

Preparing to leave the UK

30 Aug 2022

You may have been offered a new role overseas, or leaving the UK to start a life in a new country, however there are so many things to consider when planning a big move abroad, such as:

  • Making sure your passport is still in date
  • Applying for your visa
  • Arranging any required vaccinations
  • Changing your money
  • Making sure your phone is unlocked
  • Arranging your insurance
  • Forwarding your post…

There may be larger issues around property and assets.

And the list could go on. But you may also want to take a moment to consider what this means for your tax position.

Tax Residence

Firstly, please note 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 leave 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 three cases under which you may split your year when you leave 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. They may also dictate or restrict how many days you can spend in the UK after you have left or if a particular leaving date may be better than another.

Administration and paperwork

Often, if you are leaving the UK you may have to notify HMRC, either as you leave or in the year following your departure. There are two main ways of doing this – through a form P85 or through your tax return, depending on your personal circumstances.

If you are leaving the UK but remain employed by a UK company, your employer may also have some responsibility for notifying HMRC of your departure and it is certainly worth considering whether you should review your contract of employment and your pension position.

This is not all bad news though – you may even find yourself receiving a refund of tax!

Other considerations

If you are planning to return to the UK in the future, you may also want to spare a thought for your national insurance position. There is the possibility to make voluntary national insurance contributions to maintain your record and eligibility for state pension.

You will also need to watch out for incurring a capital gains tax (CGT) liability on your return to the UK – temporary non-residents will pay UK CGT on any gains they made while abroad.

Leaving the UK may also impact previous tax elections and reliefs. Before leaving, please think about whether you have or should have any such elections in place – e.g. a main residence nomination, a CGT holdover election.

Finally, something else to consider that you may not have thought of – do you have a role with a trust? A change in residence for an individual can have a (possibly unintended) knock-on effect on the tax position of a trust.

There can be more to consider than you may have thought (or wanted to think), we are happy to help you make sure everything is considered, organised and submitted as required, please contact us for advice.

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