Non-Resident Personal Allowance – Are you eligible?
The non-resident personal allowance is the amount of money you can receive as a non-resident without paying tax. It is identical to the personal allowance for residents of the UK.
Generally, above a certain value you must pay tax in the UK. However, below that value you don’t need to pay any tax if you are eligible to receive this personal allowance.
If you receive income you may need to pay income tax, and if you sell something for more than you buy it for, you may have to pay capital gains tax.
At the time of writing (September 2018) the personal allowance threshold for income tax is £11,850 and the personal allowance threshold for capital gains tax is £11,700.
Consequently, if you are eligible to receive the income tax personal allowance and your income is less than £11,850 you need not pay any tax. Similarly, if you are eligible to receive the capital gains tax personal allowance and you sell something for more than you buy it for, you do not pay any tax either provided the gain is less than £11,700.
Though these are the main two types of allowance, there are others. You can read about the most important taxes and allowances here.
Who is eligible for a non-resident personal allowance?
The bad news is, it is not available to everyone, but the good news is, it is available to many people. It is available to you if:
1. You have a British Passport;
2. You are a British citizen;
3. You are a European Economic Area (EEA) citizen;
4. You worked for the UK government at any time during the tax year in question; or
5. Your country of residence has a double-taxation agreement with the UK which enables you to receive the allowance.
You have a British passport
If you have a British passport, you are eligible to receive the non-resident personal allowance.
You are a British citizen
If you are a British citizen, you are eligible to receive the non-resident personal allowance.
I assume that most people will know if they are a British citizen and have a British passport, but if you are unsure you can check here.
You are a European Economic Area (EEA) citizen
If you are a European Economic Area (EEA) citizen, you are eligible to receive the non-resident personal allowance.
I’m not sure if Brexit will impact this in the future, but at the time of writing (September 2018) you are eligible to receive the non-resident personal allowance if you are a citizen of any of the following countries:
Austria, Belgium, Bulgaria, Croatia, Republic of Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, Iceland, Liechtenstein, Norway, and the UK.
You worked for the UK Government during the tax year in question
If you worked for the UK Government during the tax year in question, you are eligible to receive the non-resident personal allowance. I’m guessing you’ll know if you worked for the government at anytime during a tax year.
Countries with a double-taxation agreement with the UK
If you don’t fit into any of the categories above, you may still be eligible to receive the non-resident personal allowance. Many countries’ residents are. It all depends whether your country of residence has a double-taxation agreement with the UK and what the nature of that tax agreement actually is.
Each double-taxation agreement details which country you pay tax in, which country you apply for relief in, and how much relief you receive.
You can download a detailed guide which includes all the different tax treaties here.
If there’s a treaty with the country you are living in, you need to fill out a special tax form. Many countries have specific forms that need to be competed as follows:
UK Tax law is constantly getting updated, so I would definitely recommend giving the UK Government website a visit if there is something of particular importance to you.
If you generate money in the UK you will probably need to do a self assessment tax return.
And if you have a lot of time on your hands you could do this yourself. You can find the forms you need to complete here.
Alternatively you could use software to help you, which I’ve talked about here. And a third option would be to pay a professional to do everything for you. Prices aren’t as high as they used to be. I’ve talked more about this here.
You can read more articles about tax here.