With its world-class cities, diverse culture, strong economy, and historic charm, the UK remains one of the most sought-after destinations for expats worldwide.
In this guide, we’ll walk you through everything you need to know about relocating to the UK from a personal tax perspective, including tax residency, income tax, special tax regimes and tax return obligations.
TaxPilot recommend that you organize your affairs in good time to get ahead and make the most of favorable tax treatment while making sure you’re meeting your tax return obligations.
UK follows a residence taxation model. If you are resident, you will pay tax worldwide incomes. If you are non-resident, you will pay tax on local incomes only.
if you spend more than 182 days in the UK during the tax year.
if you work full time in the UK during any 12 month period commencing or ending in the tax year.
if you have a home in the UK that you are present in on more than 29 days during the tax year.
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Providing that you are considered a new arriver, foreign incomes and gains will be exempt from UK taxation for four tax years. To be considered a new arriver, you must be non-resident for 10 consecutive tax years prior to arrival to the UK. UK can be a very tax efficient place to live for expats and nomads and as such, Global Tax Consulting recommends seeking personalized tax planning advice to take advantage of the special tax regime.
Exempt from UK taxation.
Applied for four years.
Tax on property and share sales
Tax on value of owned assets
Tax on assets passed to heirs
Tax to contribute to state welfare
If you receive incomes overseas while you are living in the UK, you may find the source country, as a starting point, continues to tax the income which may cause double taxation unless you are using special tax regime.
Double taxation agreements can be used to mitigate double taxation and receive tax free income. As such, the more double taxation agreements a country has, the better, as agreements will ensure you’re not taxed twice and even better, ensure your income is tax free.
At present, the UK has 134 double taxation agreements signed.
