Moving abroad as a British expat?
When moving abroad as a British expat it is essential that you understand what you need to do and when, to ensure that all your family’s affairs are in order.
Our aim is to help make that transition be a smooth as possible. Check out the below information for everything you need to know about moving to the UAE as a British expat.
N.B. Seven Insurance Brokers are not tax advisors. Our Financial Planners can help you understand your residence status and how this may affect your tax position. If you require specialist tax advice, we will recommend you speak to a qualified tax advisor.
Work out your residence status
Whether you are UK resident usually depends on how many days you spend in the UK during the tax year (6 April to 5 April the following year).
You’re automatically resident if either:
- you spent 183 or more days in the UK in the tax year
- your only home was in the UK – you must have owned, rented or lived in it for at least 91 days in total – and you spent at least 30 days there in the tax year
You’re automatically non-resident if either:
- you spent fewer than 16 days in the UK (or 46 days if you have not been classed as UK resident for the 3 previous tax years)
- you work abroad full-time (averaging at least 35 hours a week) and spent fewer than 91 days in the UK, of which no more than 30 were spent working
UK tax requirements
First, you need to let HMRC (Her Majesty’s Revenue and Customs – the UK tax authority) know that you are leaving the UK. If you don’t do this you could potentially end up paying additional taxes which you should not need to pay as an expat. In order to let the authorities know that you are leaving you will need to complete a P85 form and return it to HMRC. You can get your P85 form here: https://www.gov.uk/tax-right-retire-abroad-return-to-uk
Your residence status when you move
When you move in or out of the UK, the tax year is usually split into two – a non-resident part and a resident part. This means you only pay UK tax on foreign income based on the time you were living in the UK. This is called ‘split-year treatment’.
You will not get split-year treatment if you live abroad for less than a full tax year before returning to the UK. There are other conditions you will also need to meet.
To find out if you qualify and see which split-year treatment ‘case’ you’ll need to mention on your Self Assessment tax return, you can read chapter 5 of HMRC’s guidance note on the Statutory Residence Test
Non-resident tax returns: completing a tax return as an expat
Even though you are no longer a resident of the UK, you might still be liable for tax on certain parts of your income such as rental property and/or pensions. Follow the link below if you are liable for UK tax even as a British expat.
Capital Gains Tax
Capital Gains Tax (CGT) is a tax on the profit you receive when you sell an asset that has increased in value. It is the gain you make that is taxed, not the amount of money you receive.
If you have a property in the UK you may still need to pay CGT if you sell, even as an expat (The rules surrounding expats are about to change). How much CGT you will be liable before depends on a number of factors surrounding when you first bought the property.
Check below to see if you need to pay capital gains tax if you sell you assets.
National Insurance Contributions
You will still need to contribute towards your National Insurance to ensure you qualify for the full UK State Pension and other benefits. You must be eligible to pay voluntary National Insurance contributions for the tax years that the contributions cover. You can usually only pay for gaps in your National Insurance record from the past 6 years, however you can sometimes pay for gaps of more than 6 years, depending on your age.
By following this link, you can check your current National Insurance record.
Check the below HMRC page to see if you are eligible to pay:
Once you have established if you are eligible to pay your NI contributions, the below leaflet (NI38) details the classes of National Insurance contribution, as well as why and how you can continue paying whilst living abroad. Click here for more information.
Your UK will may need to be updated to reflect a change in your residence status and remain valid. UK wills are not recognised in the UAE for the purposes of covering UAE based assets. You may need a will registered in the UAE to protect assets held in this country.