Are You Going To Work Abroad?
Have some free tax advice ...
This summer, there will be teachers, life guards, nurses, all sorts of other people, who are going to leave the United Kingdom and go work somewhere else in the world ...
If you're going to work abroad then here's some free tax advice!
copyright: anyaberkut / 123rf stock photo (licensee)
In 2016, some 336,000 people left the UK to live and work elsewhere in the world, with around a third going to EU countries and another third to Australia and other Commonwealth countries.
"Don't forget that you also need to think of the long term issues of moving abroad!"
There are lots of things that you might be considering, but one of them should be, what happens if I want to come back? Make sure that you have an exit route to get back to the UK.
There are lots of other things that you need to think about, for example, mail redirection, medical insurance, pets, bank accounts, credit cards, pensions, to name just a few. Ex-pat pension planning is a particular issue to think about, but this article is all about tax.
If you are leaving or thinking of leaving the UK, then what do you need to think about for tax purposes?
Complete HMRC form P85. This form is used to inform HMRC that you are going abroad. If you have very simple tax affairs, then you can use it to claim a tax refund. If your tax affairs are complex, then you will probably also need to complete a tax return.
If you have a house that you are renting out, then complete form NRL1. This form registers you as a non-resident landlord with HMRC and, in exchange for promising to complete a UK tax return every year, you can be paid the rents without deduction of tax at source.
If you have UK income that requires you to complete a tax return, then register to do that using HMRC form SA1.
If you are self-employed, and this will continue once you are abroad, then you have two sets of complications. Firstly, bringing your UK self-employed tax affairs to an end and secondly, registering as self-employed in the country you are moving to. It is sometimes advantageous to set up a limited company, either in the UK or the country you are moving to, in this circumstance.
If you are going to sell something that will make a capital gain, then consider waiting to sell it while you are abroad. However, this will only save you tax if you stay abroad for a long time. At the date of writing, the rule is that you need to be abroad for 5 complete tax years before your capital gain is not still taxable in the UK.
Note that if you are non-resident when you sell a house in the UK, then you will have to complete a special tax return within 30 days of sale.
If you are a shareholder in a company and can vary the timing of when dividends are paid, it might be advantageous to have those dividends paid after you have left the UK rather than before. It all depends on the tax rules of the country you have moved to.
If you have ISA's then they stop being tax free in the UK when you move abroad. However, if you intend to come back to the UK, it may be worth keeping them going rather than changing to a different sort of account.
Consider registering and paying UK National Insurance whilst you are abroad. You can find out from HMRC if you have paid enough NI to get a full state pension, if not then you can register and pay NI contributions so that you do qualify. To do this, you will need HMRC leaflet NI38 and form CF83.
Moving abroad can be complex, and a frequent mistake is not doing enough research and planning to make it all happen smoothly and hassle free.
"Would you like to know more?"
If you would like some help and advice about moving abroad and how it affects your tax position, then do call me on 0333 335 0422 or click here to ping me an email and let's see how I can help you.
Until next time ...
I've been an accountant in and for business since 1987 and have a wide experience of consultancy, audit, accounts, taxation and wealth planning work from individuals and small businesses to multinational corporations and charities.
My eclectic interests in growing and developing business span a number of areas … and can be summarised as strategic business advice and tax saving advice.
I have worked with the Chamber of Commerce to deliver courses for people about starting up in business and have lectured about tax for a major accountancy practice and for Milton Keynes College.
I relax by reading fiction and by getting away from the office in a campervan.
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