Non-residents liability to tax in the UK

Non-residents liability to tax in the UK

Q1: How can I claim repayment upon leaving the UK? (For temporary visitors to the UK only)
A1: To enable HMRC to consider any Income Tax repayment that may be due to you please complete form P85.

Please send the completed form, together with parts 2 and 3 of your P45 certificate of pay and tax (provided by your former UK employer) to the tax office dealing with your UK tax affairs.

If you were employed in the UK for only part of the last tax year, and were still on emergency code at 5 April, you may have overpaid tax for the earlier year too. Your employer should have given you a form P60 showing your pay and tax paid. Emergency code is indicated by the symbols ‘W1’, ‘M1’ or ‘X’ after the tax code. HMRC do not provide any special claim form. Simply ask your UK tax office to make a refund for that year too.

Q2. When I go to live or work abroad, will I continue to pay UK tax?
A2. If you remain treated as resident in the UK for UK tax purposes, normally you will be taxable on your income arising in the UK and overseas. If you are treated as resident and pay tax outside the UK HMRC can give appropriate credit for any tax paid abroad.

If you become treated as non-resident, you will normally only be taxable on your income arising in the UK.

Q3. In what circumstances would I become non-resident?
A3. Normally if you leave the UK to work abroad full-time, you will become not resident and not ordinarily resident in the UK if:

your absence and employment from the UK covers a complete tax year (that is 6 April to 5 April)
you spend less than 183 days in the UK during the tax year
your visits to the UK do not average 91 days or more a tax year over a maximum of four years
From 6 April 2008, days when you are in the UK at the end of the day, that is midnight, are normally counted as days spent in the UK.

Q4. Can I choose to pay tax in the UK rather than in my country of residence?
A4. No. If a double taxation treaty is involved, the country in which you pay tax will be determined as a matter of fact and not choice. More information on Double Taxation Treaties.

Q5. Will I have to pay tax in the country to which I go to live or work?
A5 The country to which you go to live or work may tax you on your world-wide income. This will depend on its own laws. You may need to ask the tax authority there for advice. More information on Double Taxation Treaties.

Q6: Why am I paying tax in the UK on my income when I am no longer resident there?
A6. Income arising in the UK will remain liable to UK Income Tax. However, depending on your nationality and where you live you may be eligible to:

Make a claim for repayment of UK Income Tax. More information on Double Taxation Treaties.
Make an application for exemption from UK Income Tax. More information on Double Taxation Treaties.
Use any personal allowances to which you may be entitled to offset some or all of your tax liability. More information on Personal Allowances.
Q7. I have a bank/building society account in the UK. Will tax still be deducted from interest if I am non resident in the UK and can I claim repayment?
A7: From 6 April 1996, where you are treated as not resident for the whole tax year, the liability to tax on interest from a UK bank or building society is limited to the tax deducted at source, if any. However, this is provided that the account is not held in connection with a trade, profession or vocation carried out through a branch or agency in the UK.

If you are not ordinarily resident in the UK, you can apply to receive future interest without deduction of tax by providing your bank with a ‘not ordinarily resident declaration’ on form R105. However, please note that not all banks choose to offer the facility of gross interest to non-residents, so please check with your bank first.

If you would like to make a repayment claim for tax already deducted, certain non-resident individuals can claim the UK personal allowance against income liable to UK Income Tax. If you wish to pursue such a claim, the relevant claim form R43 is available.

If you do not wish to claim personal allowances, or your personal allowances are used against other sources of UK income, then you may be due tax relief under the terms of any Double Taxation Agreement between the UK and your country of residence.

Q8. If I live abroad and receive a pension from my former employer. How will it be treated for UK tax purposes?
A8 If you have recently left or are about to leave the UK please remember to complete form P85 and return it to the tax office dealing with your UK tax affairs.

In general, income arising from sources within the UK to a non-resident individual remains liable to UK tax. However, you may be due tax relief under the terms of any Double Taxation Agreement between the UK and your country of residence.

You can view or print a Double Taxation Digest (PDF 168K), which is a summary of the main parts of all our Agreements. In some cases such relief is not available if it is for a pension paid in respect of a former government or local government service.

If you wish to pursue a claim, you can download a variety of claim forms.

If you would like to make a repayment claim for tax already deducted, certain non-resident individuals can claim the UK personal allowance against income liable to UK Income Tax. If you wish to pursue such a claim, the relevant claim form R43 is available.

Q9. I am not resident in the UK and I have been paying tax on my annuity. Is this correct?
A9. Please see our separate list of frequently asked questions about Retirement Annuities paid to Non Residents.

Q10. What happens if I let my UK home/property whilst I am living or working abroad?
A10. Letting agents, or certain tenants if there is no letting agent, must deduct basic rate Income Tax from the UK rental income if the landlord has a usual place of abode outside the UK. However, landlords have the option of applying for approval to receive their UK rental income with no Income Tax deducted by simply completing form NRL1 (PDF 205K).

The granting of approval does not grant exemption from UK Income Tax; any tax liability will be dealt with under Self-Assessment.

If the rental income is also charged to tax in your country of residence, then that country should give the relevant tax credit for the UK tax paid.

If you are not in Self Assessment, you have paid tax and want to claim a repayment, please complete and send us form R43.

If your rent is received gross and you did not receive a Self Assessment return, the tax return is not necessary if no tax liability arises.

If you jointly own the property, the income is usually shared equally; owners are individually responsible for any UK tax liability arising from their share of that income.

Therefore, each owner has to complete form NRL1 (PDF 205K), make a claim for repayment and complete a tax return in respect of your own share.

Further information about the Non-Resident Landlord Scheme is available.

Q11. What is the time limit for making a claim to repayment of UK tax?
A11: HMRC don’t want you to miss out on claiming back any money that you are entitled to.

However, if you are a PAYE taxpayer, or in some circumstances a Self Assessment taxpayer, you need to be aware the deadlines to send in your claims are changing or have already changed.

Most PAYE taxpayers don’t need to make a claim. However, if your circumstances change you may be entitled to claim back tax you have already paid in earlier years.

If you are planning to do this you may need to send your claim to HMRC earlier than you expect. That’s because the time limits for claiming your tax back are changing, from six to four years, in 2012 – please check what you need to do next.

Self Assessment taxpayers may also be able to claim back tax they paid in earlier years. In their case the time limits have already changed – please check what you need to do next.

If you are a Self Assessment taxpayer, but wish to make a claim for a year where you did not have to file a Self Assessment return, you will have the same deadlines as the PAYE taxpayers – check what you need to do next.

For any taxpayer who isn’t in either the Self Assessment or PAYE systems the deadlines will be those for PAYE – what you need to do next.

More information

Q12: I am coming to live or work in the UK. What do I need to do?
A12: See the ‘Coming to work in the UK’ guidance

Q13: In what circumstances will I be treated as a UK resident for UK tax purposes?
A13: To be treated as resident in the UK you must normally be physically present in the country at some time in the tax year. You will always be treated as resident if you are here for 183 days or more in the tax year. There are no exceptions to this. You count the total number of days you spend in the UK – it does not matter if you come and go several times during the year or if you are here for one stay of 183 days or more. If you are here for less than 183 days, you may still be treated as resident for the year if you visit the UK regularly and your visits average 91 days or more a tax year over a period not exceeding four years.

From 6 April 2008, days when you are in the UK at the end of the day, that is midnight, are normally counted as days spent in the UK.

Q14: I am not resident in the UK so why do I need to complete a Self Assessment return?
A14: Please see our separate list of frequently asked questions about Self Assessment for non residents.

Q15: Can I be resident in two countries at the same time?
A15: It is possible to be resident in both the UK and some other country (or countries) at the same time. Where, however, you are resident both in the UK and a country with which the UK has a Double Taxation Agreement, there may be special provisions in the agreement for treating you as a resident of only one of the countries for the purposes of the agreement.

Helpsheet HS302 gives you information to help you decide whether you are resident of the UK or another country for the purposes of applying the provisions of the Double Taxation Agreement between the UK and that country.

Q16: What is Split Year Treatment?
A16: You are either resident or not resident in the UK for the whole of a tax year. However, by concession, the tax year is split in certain circumstances when you come to, or leave, the UK part way through a tax year. Where this applies, your tax liabilities on income which are affected by tax residence will be calculated on the basis of the period of your actual residence here during the year. This has the same effect as splitting the tax year into resident and not resident periods.

The notes that accompany the non-residence Self Assessment supplementary page will help you determine whether you qualify for Split Year Treatment.

Q17: What is domicile?
A17: Domicile is a concept of general law. It is used to determine the system of personal law (dealing with matters such as marriage, divorce and wills) that should be applied to an individual who has connections with more than one jurisdiction. Domicile is distinct from nationality or residence. You can only have one operative domicile at any given time.

HMRC Residency provides specialist advice to other tax offices on the domicile of individuals where it is material to the calculation of the individual’s UK Income Tax or Capital Gains Tax liabilities.

You should contact your own Tax Office if you have any queries on your domicile position.

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