Question

I am UK person and I am expat for more than 23 years in Kuwait and know I am planning to return to UK as tax advisor which questions you will ask me to determine my situation?

Answer 1

Meaning of Expat:

A person is called an expat if he/she lives in a country other than the one in which he/she was born and raised. eg. Some expats are sent by their companies to work in foreign countries.

Following points should be given due consideration for Expat to understand tax requirements as a UK expat:

Residence and Domicile:

A person’s liability to personal taxation in the UK depends largely on that person’s tax residence and domicile status, and on other factors such as the location of assets and the source of income and capital gains.

A resident of a country (UK) liable to pay tax on his global income in that resident country (UK). However if a person is not resident of UK then that non-resident is only chargeable to tax on income arising from a source in the UK.

Dividend income, interest, and other savings income is taxable if the source of that income is in the UK.

Capital Gains Tax for Expats:

In general non-residents are not subject to UK tax in respect of capital gains realized on the disposal of UK assets. However there are three exceptions to this general rule.

a. A non-resident individual trading in the UK through a branch or agency is chargeable in respect of UK assets used or held in or for the purposes of the trade or the branch or agency.

b. Certain anti-avoidance legislation deems capital gains to be income and, as such, taxable even if accruing to a non-resident.

c. An individual who is non-resident for less than five complete tax years is assessed in the year of his return on gains realized during his absence on assets he held on the date of departure.

This does not apply to those individuals who were resident in the UK in less than four of the seven tax years preceding the year of departure.

- It is possible to be resident in the UK and another country at the same time, which amounts to “dual residence”.

In many cases there will be a “double tax treaty” between the two countries of residence which should ensure that you generally don't pay full tax twice on the same income or capital gains.

Where the UK does not have a treaty with another country, there will be given “unilateral relief” grant a credit in the UK for foreign taxes paid.

- If you are either classed as a tax resident in the UK or receive an income in the UK, you will normally receive a personal tax allowance on your UK income subject to some threshold limit.

- Even if you are a UK non-resident, if you are planning to buy a house in the UK you will be subject to Stamp Duty Land Tax (SDLT).

(There may be other points also)