UK Personal Allowance for Non Residents – Are you eligible?

Are you a non UK resident? If so you may be eligible for the personal tax allowance?

If you are, you only need to pay tax above a certain threshold. In fact, you may not need to pay anything at all.

The actual amount is determined by the type of tax that you need to pay. And unfortunately there are many different types of tax!

In this article we will cover the two main ones you are likely to pay: Income and capital gains.

(I go into more details about some other taxes non residents may need to pay here.)

Income Tax

Income tax is the biggy for most people. This is usually the case no matter where you live.

The most common forms of income are money you earn from work, property rental income, interest on bank savings, dividends on stocks and shares, bond income payments, and retirement pensions.

If you earn money from any of those sources you could be liable.

However if you are eligible for the personal allowance you only pay tax over a certain level.

Right now the personal allowance for income tax is £12,500.

So if you are eligible (we will come to who is shortly) you only pay tax if your total annual income is over this value.

Capital Gains Tax

Capital gains is the other big tax that most people end up paying somewhere down the line.

The most common forms of capital gains are the profits that you make when you sell something. Typical things you might sell include property, shares, business assets, and possessions worth over £6000.

However, if you are eligible for the personal allowance you only pay tax on capital gains above a certain level.

Right now the personal allowance is £3000 for capital gains. (It used to be a lot higher).

So if you are eligible you only pay tax if the total of all your capital gains is over this value.

Who is Eligible?

You are eligible for the personal allowance if any one of the following conditions apply to you:

• You hold a British passport
• You are a citizen of a European economic area (EEA*) country
• You have worked for the UK government at any time during that tax year

*EEA countries include the following:

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.

Self Assessment Tax Return

If you earn money in the UK as a non resident you will probably need to complete a self assessment tax return.

And if you have plenty of time on your hands and don’t mind repetitive number crunching you can do this the traditional way, which involves completing multiple forms by hand and then sticking them in the post. You can find the forms here.

Alternatively, you could get software to help you, which I’ve covered here. And a third option would be to pay a professional to help you. These days fees for this are much lower than they used to be. I’ve written about how you can go about finding a tax accountant here.

The Bottom Line

If you make money in the UK you may need to pay tax.

But if you are eligible for the personal allowance you only need to pay tax above a certain threshold.

Anybody with a British passport should be eligible.

If you are not resident in the UK but are eligible for the personal allowance you can use form R43 to make your claim.