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Tax implications of leaving the UK
This blog is a must-read for anyone emigrating from the U.K., contained within is a step-by-step guide on what you need to do before, during and after your move overseas.
The blog will cover two important topics; your National Insurance contributions and the information you need to provide to HMRC if you are in the process of moving overseas (outside the UK).
First things first, when you leave the UK permanently or for any period over one full tax year you need to inform HMRC. The tax year runs from April 6th to April 5th next year (2020). Those leaving the UK for holidays or business trips are exempt from this.
You need to tell HMRC before your departure through the use of a P85 form, you also need to include parts 2 and 3 from your P45 form, these can be requested from your employer. You will be required to send a self-assessment tax return instead if you usually complete one. You will need to send a P85 form if you intend on working full-time for a UK-based employer for at least one full tax year.
Tax returns need to be sent via post – there is no online service available for this. Tax forms can be found on HMRC’s website.
After you have sent the relevant paperwork you may be considered non-resident on the day you leave the U.K. It is important that you carefully read the split-year treatment section on HMRC which explains if you considered UK resident on not depending on days spent in the U.K. within a tax year along with other potential ties.
You also need to inform your local council of your move to stop paying council tax.
You may be entitled to a tax rebate depending on your circumstances, this will be calculated by HMRC by the end of the tax year.
Many UK citizens who are living overseas decide to make voluntary National Insurance contributions. This is highly recommended for anyone planning on eventually returning to the UK or those planning on claiming the State Pension in later life. To receive your full state pension, you need to make a minimum of 35 years of National Insurance contributions.
Visiting the UK when you live overseas
Most Brits who live overseas do at some point return for a holiday or an extended visit. It’s important to know how this affects your residential status. You can visit the UK without becoming resident again, but an extended visit may trigger residential status and a requirement to pay income tax. If you work full-time outside the UK then you can visit the UK for up to 90 days per tax year as long as you work no more than 30 of these days.
Other factors can trigger residential status once you’ve left the UK, for example, getting involved in a UK based business or investment in property. You can check your residency status online on the GOV.UK website or by talking with one of our advisors.