Our Guide To UK Tax For Non-Residents

According to the tax legislation in the UK, determining your status as a non-resident for tax purposes involves the Statutory Residence Test, as outlined in FA 2013. This guide will help you navigate the complexities of UK tax for non-residents, including important considerations like the duration of physical presence in the UK, the impact of various connections or 'ties' to the UK, and how these factors affect your tax obligations.

Just because you are not resident in the UK under the test, this does not mean that you will not be subject to UK taxes for non-residents.

Table of Contents

• A Review of the Rules

• Split Year Treatment

• Pre-Arrival Tax Planning

• Capital Gains Tax for Non-Residents

• Disposals of UK Property

• Inheritance Tax for Non-Residents

• Double Taxation and Tax Treaties

• Key Tax Considerations for Non-Residents

A Review of the Rules

UK tax laws mean you may still be able to spend a number of days in the UK without triggering UK residence.

ASWATAX can conduct an assessment of the Statutory Residence Test tailored to your individual circumstances. Our analysis determines how many days you can be present in the UK before gaining resident status. We have extensive expertise in this area.

Split Year Treatment

Individuals arriving in or departing from the UK during a tax year might be eligible for split-year treatment.

These complex UK non-resident tax rules benefit individuals who would otherwise qualify as residents for the full tax year, allowing them to split the tax year into residency and non-residency periods.

Pre-Arrival Tax Planning

Non-resident individuals that are coming to the UK should undertake careful planning and arrange their affairs appropriately in a tax efficient manner.

ASWATAX can assist with UK tax for foreigners for those individuals preparing to come and live in the UK. We can also assist overseas investors who own UK land and property.

Capital Gains Tax for Non-Residents

UK capital gains tax for non-residents is more complex. Generally speaking, non-residents are not chargeable to UK capital gains tax but there are a number of exemptions to this rule, one of which is the temporary non-residency rules.

Individuals who lived in the UK for four of the last seven years prior to their departure will be subject to UK capital gains tax if the individual returns to the UK within five tax years. If individuals held assets at the time of their departure from the UK and disposed of them during their non-resident period, they must pay UK capital gains tax upon their return.

Disposals of UK Property

UK property is also subject to UK capital gains tax regardless of your residency position. Sales must be notified to HMRC within 60 days of the transaction.

Penalties and interest will be levied for late payment and submission so if you require assistance, please do get in touch and we will be able to assist with your filing obligations.

Inheritance Tax for Non-Residents

UK inheritance tax is applicable if an individual is domiciled (or deemed domiciled) in the UK.

There are a number of inheritance tax planning opportunities for non-residents to consider to reduce the UK inheritance tax exposure. Our strategies are well-versed and undertaken for clients previously.

Double Taxation and Tax Treaties

UK and overseas tax could become due where income arises in one jurisdiction and the individual is resident in another, or where an individual is a dual resident. If there is a double tax treaty in place between the two countries, this can be used to prevent double taxation from occurring.

ASWATAX possesses significant expertise in providing advice on UK taxes for non-residents, particularly in the application of double tax treaties that the UK has with various jurisdictions.

Key Tax Considerations for Non-Residents

Generally, individuals who are not resident in the UK will only be subject to tax on their UK sources of income (and possibly capital gains).If you are a British citizen (or a citizen of another EEA country), you still qualify for a tax-free personal allowance.

Individuals can use the disregarded income rules to restrict their UK tax liability to the amount of UK tax withheld at the source.

Meet Omar Omar is a Chartered Tax Advisor (a.k.a an expert on tax issues) and founder of ASWATAX. He regularly shares his knowledge and best advice here in his blog and on other channels such as LinkedIn. Book a call today to learn more about what Omar and ASWATAX can do for you.

*Disclaimer: ASWATAX is a firm of Chartered Tax Advisors, and we strive to provide accurate, up-to-date tax insights. Tax laws may change, so this content is for general guidance only and not a substitute for professional advice. Seek independent tax and legal counsel before making decisions. ASWATAX is not liable for any loss from reliance on this information. Use at your own risk.