Disadvantages of being UK tax resident and living abroad
Discussion
Hi all
Apologies for the bad wording of the thread title which I can’t edit!
I am living abroad in the EU and therefore when I next complete a SA tax return I will have been out of the UK for more than 6 months, therefore treated as non resident. I understand that I ll obviously have to pay UK tax on my UK income which is absolutely fine. Are there any nasty surprises i haven t thought about (from a UK point of view, I m aware of double taxation stuff etc). I understand I won t get child benefit any longer, but have I missed anything else?
Many thanks
Apologies for the bad wording of the thread title which I can’t edit!
I am living abroad in the EU and therefore when I next complete a SA tax return I will have been out of the UK for more than 6 months, therefore treated as non resident. I understand that I ll obviously have to pay UK tax on my UK income which is absolutely fine. Are there any nasty surprises i haven t thought about (from a UK point of view, I m aware of double taxation stuff etc). I understand I won t get child benefit any longer, but have I missed anything else?
Many thanks
I was tax resident in France for 17 years. I am sure you have the gist of what will happen.
The bit of the double taxation treaty that needed a penny to drop for us was that you need to declare and be taxed on any U.K. income, but you also declare it in the EU and get a credit for the U.K. tax paid. but still end up paying some more tax there if it is due under their tax regime. Simply, if U.K. tax is zero because of your U.K. tax allowance, you will still pay the correct full rate in the EU.
In the days when the U.K. offered significant CGT allowances, it comes as a shock to just how much tax was due in France, nonetheless.
The biggest bug was being treated as a pariah by U.K. financial institutions. We maintained a home in the U.K. just to get around this requirement.
The bit of the double taxation treaty that needed a penny to drop for us was that you need to declare and be taxed on any U.K. income, but you also declare it in the EU and get a credit for the U.K. tax paid. but still end up paying some more tax there if it is due under their tax regime. Simply, if U.K. tax is zero because of your U.K. tax allowance, you will still pay the correct full rate in the EU.
In the days when the U.K. offered significant CGT allowances, it comes as a shock to just how much tax was due in France, nonetheless.
The biggest bug was being treated as a pariah by U.K. financial institutions. We maintained a home in the U.K. just to get around this requirement.
rdjohn said:
I was tax resident in France for 17 years. I am sure you have the gist of what will happen.
The bit of the double taxation treaty that needed a penny to drop for us was that you need to declare and be taxed on any U.K. income, but you also declare it in the EU and get a credit for the U.K. tax paid. but still end up paying some more tax there if it is due under their tax regime. Simply, if U.K. tax is zero because of your U.K. tax allowance, you will still pay the correct full rate in the EU.
In the days when the U.K. offered significant CGT allowances, it comes as a shock to just how much tax was due in France, nonetheless.
The biggest bug was being treated as a pariah by U.K. financial institutions. We maintained a home in the U.K. just to get around this requirement.
Also applies to ISAs which are not generally recognised in Europe but pensions are.The bit of the double taxation treaty that needed a penny to drop for us was that you need to declare and be taxed on any U.K. income, but you also declare it in the EU and get a credit for the U.K. tax paid. but still end up paying some more tax there if it is due under their tax regime. Simply, if U.K. tax is zero because of your U.K. tax allowance, you will still pay the correct full rate in the EU.
In the days when the U.K. offered significant CGT allowances, it comes as a shock to just how much tax was due in France, nonetheless.
The biggest bug was being treated as a pariah by U.K. financial institutions. We maintained a home in the U.K. just to get around this requirement.
ISA's is a big one already mentioned.
Foreign due restrictions likely wont recognise the CGT & income tax protection an ISA gives (the US certainly doesn't, but they're particularly draconian wrt foreign accounts)
House sale - again may not affect you - but you'll lose any PRR on a primary residence if sold while abroad.
Foreign due restrictions likely wont recognise the CGT & income tax protection an ISA gives (the US certainly doesn't, but they're particularly draconian wrt foreign accounts)
House sale - again may not affect you - but you'll lose any PRR on a primary residence if sold while abroad.
You may find it difficult to open any new bank accounts in the UK, which includes new accounts with your current bankers. Following Brexit most entities reviewed their ability to open/maintain accounts for those resident in the EU. A particular problem is when the best rates are on newly launched accounts, but you can't open them as they are only available to UK residents (looking at you Nationwide). National Savings is one potential solution to this.
Oh another oddity:
You can’t use the self assessment website (for rental income, dividends etc) if domiciled abroad.
Has to be a paper return (which is impossible to do as you need to get them to post you SA01 - good luck with that) or use an intermediary website. Costs me £18 to use a 3rd party site so no biggie - but why!?
f
k knows why.
You can’t use the self assessment website (for rental income, dividends etc) if domiciled abroad.
Has to be a paper return (which is impossible to do as you need to get them to post you SA01 - good luck with that) or use an intermediary website. Costs me £18 to use a 3rd party site so no biggie - but why!?
f
k knows why. GiantEnemyCrab said:
If you are tax resident overseas but have a UK PAYE income, does that get taxed at UK rates or at your overseas rate? No work takes place in the UK at all, it is all overseas.
The resident country has a dual taxation agreement with the UK.
I (or rather, the company) just paid to have the accountants sort it all out, but from what I remember of their very conservative approach to it the UK tax was all paid as normal then all reclaimed later, and the actual country of residence was paid the tax on the whole lot under their rules. EU with dual taxation agreement.The resident country has a dual taxation agreement with the UK.
Nice fat refund from HMRC each year as ultimately nothing due, but that & more all flowed to the country of residence.
In my case I think this approach was designed as nice and deliberately safe (at least when payment was made on time!) but also involved a fair chunk of float between the two sets of taxes due to pay/reclaim/pay on the two different jurisdictions & tax years.
There was lots of fun because the tax years differed; plenty of entertainment in resolving paperwork when the tax year in one place straddles two years of tax statements from another. The accountants will surely have had to play some games around exchange rates too.
So you should probably be paying your overseas rate on it all, the biggest trick if DIYing looks to be in how you'd resolve the UK stuff to get the PAYE money refunded to pay your actual bill, especially if you haven't got enough free cash to bridge the two if you need to.
thekingisdead said:
Oh another oddity:
You can t use the self assessment website (for rental income, dividends etc) if domiciled abroad.
Has to be a paper return (which is impossible to do as you need to get them to post you SA01 - good luck with that) or use an intermediary website. Costs me £18 to use a 3rd party site so no biggie - but why!?
fk knows why.
Odd. I have an accountant, so I’ll let them worry about that!You can t use the self assessment website (for rental income, dividends etc) if domiciled abroad.
Has to be a paper return (which is impossible to do as you need to get them to post you SA01 - good luck with that) or use an intermediary website. Costs me £18 to use a 3rd party site so no biggie - but why!?
f
k knows why. The guy that I used in France was far more clued-up on the details of the double taxation treaty. A couple of times he found what my UK adviser was doing was incorrect, but easily remedied.
As already mentioned the HMRC working April to April effectively means a lots of detail-searching has to be done twice. I was renting my home as a holiday let and using it myself for 10-weeks each year.
As already mentioned the HMRC working April to April effectively means a lots of detail-searching has to be done twice. I was renting my home as a holiday let and using it myself for 10-weeks each year.
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