We won’t go into great depth on how you may become UK tax resident. Here are the main headlines.
Essentially, if a) you move here for work for say 2-3 years, or b) you’ve lived here 5 years, or c) you commute to UK from Europe 4 days per week, you will be UK tax resident. That’s the standard position. A new arrival who will spend most of the week living or working here is likely to trigger UK tax residence from day one.
The global pandemic has without doubt affected global mobility and cross-border moves. Has it caused tax problems ? Yes, but this is now 2021 and we have seen dozens of scenarios, related to Covid. HM Revenue & Customs are attuned to Covid related work issues; and pressing people to claim full tax reliefs.
What benefits are available to new UK tax residents ?
There’s a long list of tax advantages :
- Overseas workday tax relief – it generates massive savings based on days worked outside the UK. Plenty of pre-conditions but hugely beneficial.
- Tax-free accommodation and subsistence – a delightful tax relief, promoted heavily by HMRC who WANT to provide these savings to those that the follow the rules. Worth £5,000, £10,000 and more per year in the early years.
- Relocation tax relief – another generous UK tax relief that is often overlooked ie removal costs, rental costs in the UK.
- Travelling home – a great way to generate additional benefits. We need to discuss the detailed rules but these rules apply to family flights for example; big savings.
- Your foreign income eg lettings abroad, investments abroad – in the long-term, you may become taxable in the UK on these items. There are various ways to avoid double taxation in two countries.
- Your foreign pension – expats in the UK who still contribute to foreign pensions are often entitled to UK tax deductions.
- Bonuses – you may be receiving payments related to UK work and non-UK work. We should talk, there are some valuable tax discounts.
- There’s more to say but let’s move on !
Tax reliefs when working at home
It’s an area that applies to many UK tax residents – we are no longer required to attend the office ( that Covid virus again). We now sometimes sit in our pyjamas to work, or we zoom in our dressing gown. There is a generous UK tax relief related to home working that will gain huge popularity from March 2020 onwards. We have been at the forefront of speaking to HMRC and maximising tax rebates for our clients.
Impact of Brexit
Foreign nationals who are resident here have talked about leaving the UK, moving to the EU or elsewhere. In practice, we are not seeing that (yet). The UK remains a popular location to move to, if the situation works eg the right job, the right schools. Tax planning for tax residents is still in high demand.