While you may have the residency visa, an apartment and a salary untouched by UK Income Tax, you may still receive a notice to file a UK Self Assessment.
Being told you must file a Self Assessment can come as a surprise for many people who relocate overseas, so it is important for expats to fully understand their tax responsibilities.
The exact tax implications of living abroad will depend on your current circumstances, but here are some reasons you may not be fully removed from the UK system.
Do I have overseas residency?
Just because you are living in another country doesn’t mean your UK residence has ended.
Whether you are eligible to pay UK Tax is decided by the Statutory Residence Test, which considers days spent in the UK, family ties and available accommodation, among other factors.
If you leave partway through the year, you may be required to pay tax in the UK unless you are eligible for split year treatment.
Split year treatment works by dividing a tax year into a resident portion and a non-resident portion, separating your overseas tax obligations from those payable to HMRC.
An active UK residency or split year treatment can be the reason you are still being required to file a tax return.
You are still earning UK income
Whether you are a resident of the UAE or not, the majority of income earned in the UK while living overseas is taxable by HMRC.
One of the key culprits that leads to misunderstanding is rent. If you let a property in the UK while you live abroad, the income earned falls under UK tax rules.
However, many British citizens living abroad may still qualify for the £12,570 personal allowance, which means a chunk of rental income will be shielded from Income Tax.
You must still file a UK Self Assessment Tax Return for each year you earn rental income, declaring the profit and settling the final tax balance due.
HMRC wasn’t informed you’ve left
Notifying HMRC is a crucial step before moving abroad, as you will be less likely to face added scrutiny down the line.
If you were already in Self Assessment, HMRC will assume this will continue unless they hear otherwise.
Once they issue you with a notice to file a tax return, you are legally required to do so, or you will need to ask HMRC to withdraw the notice to file.
As failing to submit a Self-Assessment can lead to significant financial penalties, it is worth speaking to a financial specialist for a review of your tax position before moving overseas.
Speak to our accountants
While life abroad can have many tax benefits, the UK side must be effectively managed to ensure your domestic tax obligations have been effectively severed.
Our specialists can get to the bottom of why HMRC is still requesting Self Assessments and, when no return is due, we can help have the filing requirement withdrawn to avoid penalties mounting.
Unsure why you are still required to file a UK tax return? Reach out to an expert for a review of your tax position.
