UK Tax for Non-Residents

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According to UK non-resident tax rules, a person’s non-resident tax status is determined by HMRC’s statutory residence test. This test evaluates the number of days physically spent in the UK and several other factors, including the number of ‘ties’ or connections you have to the UK. However, even if you are considered non-resident under this test, you may still be subject to certain UK taxes for non-residents.

A review of the rules

UK non-resident tax rules mean you may still be able to spend a number of days in the UK without triggering UK residence. Xperta Consultancy is able to undertake an analysis of the statutory resident test based on your personal circumstances to confirm the number of allowable days of presence before you become a UK resident.

Split year treatment

Individuals coming to or leaving the UK part way through a tax year may qualify for split year treatment. These complex UK non-resident tax rules are advantageous to those who would otherwise be resident for the complete tax year and allows the tax year to be split in two periods.

Pre-arrival planning

Non-resident individuals that are coming to the UK should undertake careful planning and arrange their affairs appropriately in a tax efficient manner. xperta Consultancy can assist with UK tax for foreigners for those individuals preparing to come and live in the UK.

Key points for consideration

Generally, individuals who are not resident in the UK will only be subject to tax on their UK sources of income (and possibly capital gains). If you are a British citizen (or a citizen of another EEA county) you will still be entitled to a tax-free personal allowance.

Individuals may be able to use the disregarded income rules which restrict the UK tax liability to the amount of UK tax that is withheld at source.

Capital gains tax

UK capital gains tax for non-residents is more complex. Generally speaking, non-residents are not chargeable to UK capital gains tax but there are a number of exemptions to this rule. One of which is the temporary non resident tax rules. Those who lived in the UK for four of the last seven years prior to their departure will be subject to UK capital gains tax if the individual returns to the UK within five tax years. The disposals made during their period of non resident will become subject to UK capital gains tax upon return to the UK if the asset disposed of was held at the date of departure from the UK.

Disposals of UK property

UK property is also subject to UK capital gains tax regardless of your residency position. Sales must be notified to HMRC within 30 days of the conveyance.

Penalties and interest will be levied for late payment and submission so if you require assistance, please do get in touch and we will be able to assist with your filing obligations.

Inheritance tax

UK inheritance tax will still apply if the individual is domiciled (or deemed domiciled) in the UK. Further information in relation to domicile can be found here.

There are a number of inheritance tax planning opportunities for non-residents to consider to reduce the UK inheritance tax exposure. Further information in relation to inheritance tax planning can be found here.

Double taxation

UK and overseas tax could become due where income arises in one jurisdiction and the individual is resident in another, or where an individual is a dual resident. If there is a double tax treaty in place between the two countries, this can be used to prevent double taxation from occurring. Xperta Consultancy have extensive experience in advising about UK taxes for non-residents on the application of the double tax treaties the UK has with various jurisdictions.

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