Some 5.5m expat Brits are estimated to live outside of the UK, with 1.3m living in Australia alone. The other major English-speaking countries, New Zealand, the USA and Canada are also hugely popular with expat Brits, while a reported 400,000 expats live in Spain and almost 240,000 now live in Dubai.
Many expats still earn income from the UK, whether from a business or renting out land or property in the UK, and this can be subject to UK tax, even if you’re a non-domiciled expat Brit. According to Mike at GoSimpleTax there are some things about the UK that you simply can’t leave behind.
UK residence and paying tax
- Your UK residence status determines whether you pay tax in the UK on your foreign income.
- Non-residents only pay UK tax on their UK income, not their foreign income.
- Residents usually pay UK tax on all of their income, whether from the UK or another country.
- UK residents (who were born outside of the UK ie non-doms) do not have to pay UK tax on their foreign income or capital gains if less than £2,000 in the tax year, provided they claim the remittance basis on their Residency pages (SA109) and don’t bring them into the UK (eg by transferring them to a UK bank account).
- If a UK resident’s overseas income or gain is £2,000 or more or they bring money into the UK, they must report it to HMRC via a Self Assessment tax return. They can then either pay UK tax, which they may be able to reclaim, or they claim the remittance basis, so that they only pay UK tax on the income or gains they bring to the UK, but lose tax-free allowances for Income Tax and Capital Gains Tax and pay an annual charge of either £30,000 (if they’ve been in the UK for at least seven of the previous nine tax years) or £60,000 (if they’ve been in the UK for at least 12 of the previous 14 tax years).
- Visit government website GOV.UK for more information on paying tax on foreign income.
How to report your taxable UK income from another country
If you live overseas and have taxable UK income to report to HMRC, each year you’ll need to fill out and file a Self Assessment tax return (SA100), as well as the resident supplementary page (the SA109 form) to report your residence and domicile status.
Depending on your sources of taxable income, you’ll also need to complete supplementary pages, for example, as SA105 if you earn UK taxable rental income, or an SA103 if you’ve received taxable UK income from self-employment. Government website GOV.UK provides a full list of Self Assessment tax return supplementary pages.
Once registered, to complete your Self Assessment tax return you will need:
- your ten-digit UTR (ie Unique Taxpayer Reference) number, which enables HMRC to identify you as a taxpayer. It will be printed in previous tax returns and any tax letters that HMRC may have sent you in the past
- your National Insurance number (you’ll find it in your Personal Tax Account, previous payslips, P60s, personal tax letters, etc)
- summary totals of all UK taxable income that you received within the tax year, which could come from self-employment, employment, rental income, share dividends, pensions, savings interest, state benefits, capital gains, etc
- summary totals of relevant UK tax expenses for which you wish to claim UK tax relief
- details of pension schemes payments you’ve paid during the tax year.
How to file your Self Assessment tax return
One important thing to note is you can’t use HMRC’s online services to file your Self Assessment tax return and any supplementary pages if you live outside of the UK. You can use a UK-based accountant to do it for you, which obviously involves paying a fee, or you can use commercial Self Assessment filing software, which is much cheaper and fairly simple. The Self Assessment online-filing deadline is midnight on 31 January following the end of the tax year (5 April) to which the tax return refers. These dates are the same every year. Once you’ve filed your tax return, HMRC will tell you how much tax you owe and how to pay it.
How much UK tax is payable?
Many people who go to live and work overseas rent out their UK property or properties. If you earn more than £1,000 you exceed your property allowance, and your rental income can be subject to Income Tax, once your total taxable income goes over the Personal Allowance (£12,570 a year in 2024/25). The amount of tax you’ll pay will be determined by which Income Tax band your total taxable income falls into. Capital Gains Tax can also be payable if you make a “chargeable gain” from selling UK property or land.
If you live outside of the UK for six months or more a year, you’re classed as a “non-resident landlord”. You can get the full rent from your tenant(s) and pay tax on it to HMRC via Self Assessment or the tax you owe can be deducted by your letting agent or tenant, who must pay it to HMRC. They must give you a certificate at the end of the tax year showing the tax that they’ve deducted.
Landlords can claim “allowable expenses” to cover the costs they have to pay to rent out their property. Claiming allowable expenses can reduce your rental income profits and the UK tax you must pay as a result. GOV.UK provides more detailed information about paying UK tax on UK property rental income.
Need to know! The country overseas in which you live might tax you on your UK income. If it has a “double-taxation agreement” with the UK, you can claim tax relief in the UK to avoid being taxed twice.
About GoSimpleTax
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The software will provide you with hints and tips that could save you money on allowances and expenses you may have missed.
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