residency status, taxes and property ownership
Discussion
afternoon guys, hope you all had fun at the track!
i started a thread in the finance section, but i reckon i'll get a faster and more accurate response here.
the firm i'm going to be working for are applying for my residency visa ahead of me coming out, so i assume all i need do is pass the medical on arrival, have the passport stamped and i'm good to go. we're working on a provisional start date of 11th april.
i should be putting my house on the market at the end of march and letting an agency handle everything on my behalf. however i'm unsure of what tax issues i'll face if i am classed as being domiciled in the UAE. any ideas?
i know if i was still here, i would keep all profits on the house as there is no CGT to pay. does it still work the same if domiciled abroad?
also, what forms do i need to file to let HRMC know i'm leaving?
i started a thread in the finance section, but i reckon i'll get a faster and more accurate response here.
the firm i'm going to be working for are applying for my residency visa ahead of me coming out, so i assume all i need do is pass the medical on arrival, have the passport stamped and i'm good to go. we're working on a provisional start date of 11th april.
i should be putting my house on the market at the end of march and letting an agency handle everything on my behalf. however i'm unsure of what tax issues i'll face if i am classed as being domiciled in the UAE. any ideas?
i know if i was still here, i would keep all profits on the house as there is no CGT to pay. does it still work the same if domiciled abroad?
also, what forms do i need to file to let HRMC know i'm leaving?
mcbook said:
Hi there
You need to complete a P85 form to say you're leaving the country - hopefully this will result in a tax rebate, it did for me. I'm not sure on your question about tax on CGT but I'd imagine it would be tax free.
Cheers
Ian
Is there a time limit on doing this, as I've never bothered? 15 months now.You need to complete a P85 form to say you're leaving the country - hopefully this will result in a tax rebate, it did for me. I'm not sure on your question about tax on CGT but I'd imagine it would be tax free.
Cheers
Ian
Chilli said:
Is there a time limit on doing this, as I've never bothered? 15 months now.
Really not sure, the HMRC website doesn't seem to mention a time limit. I would think that you're still entitled to claim though - they'd take the money back from you if they found out you hadn't paid enough tax 2 years ago.Edited to say that I wrote all the below, and didn't directly answer the OP's question about CGT...and I don't know the anwer!! However, I was responding to the fact that he's going on 11th April, and may be much better served to go a few days before!
So anyway...what I originally wrote:
Hi ya - this is how I understand the advice I had about residency when I came over here in April 2009...and specifically about making sure you're not resident in the UK for tax purposes. My UK expat colleagues have also had similar advice, with some differences of opinion...but on the whole...
1. You need to try and be abroad for a whole tax year (april 6th to april 5th)
2. You should try not to spend more than 90 days in the UK in the first year (and definitely no 'working' days in the UK during that time). Over a number of years, that 90 days is the maximum average days per year, over the whole period of years you're away. And you must never exceed more than 183 days in any one year. So if you're away for 3 years, then you could spend more time in the UK in the first year provided the averages of the other 2 years allow it. But, to be safe, keeping it below 90 days in the first year means that if you only stay away for that year, you're within the rules and can comfortably claim non-residence, and not pay tax for any of that income.
It depends a lot on how long you think your job/life abroad will last...but you should try to start your new job prior to April 6th. If you fly out and start work on 11th, you will have to do the whole of this year to April 5th 2012 and then another full tax year until April 2013 before you can know that you will be definitely be non-resident according to the HMRC rules. If you know you'll be working abroad for at least this time to come then this is less important. However, if things change...for example you lose your job etc and have to return let's say March 2013...strictly speaking, they could declare you resident and tax you on all your income while you've been abroad, because you did not strictly serve a whole tax year (april 6th to april 5th) abroad, despite having been there for way more than 12 months elapsed time!
It's not quite that clear cut...I've heard that if you do return early, you can discuss it with them, and that they will take factors about whether you have cut ties in the UK, whether you intended a permanent or long term move into account(selling your UK property, selling cars, moving your family out etc are all good signs). But the point is...you have to correspond with them putting your case and they have to make a decision, and it may not go your way. You'll not be sure where you stand, unless you obey their stipulations about being abroad for an entire tax year to the letter...leaving them no where to argue.
As a result of the advice I received, I made sure my job started on 4th April 2009, and flew out on 3rd! This ensured that I would meet the conditions of non-residency for that first year, provided I was still working abroad after 5th April 2010.
I would be very interested in other PH'ers opinions on this area, as it's the usual wooly 'don't-know-where-you-stand' HMRC b*llocks.
Cheers,
J.
So anyway...what I originally wrote:
Hi ya - this is how I understand the advice I had about residency when I came over here in April 2009...and specifically about making sure you're not resident in the UK for tax purposes. My UK expat colleagues have also had similar advice, with some differences of opinion...but on the whole...
1. You need to try and be abroad for a whole tax year (april 6th to april 5th)
2. You should try not to spend more than 90 days in the UK in the first year (and definitely no 'working' days in the UK during that time). Over a number of years, that 90 days is the maximum average days per year, over the whole period of years you're away. And you must never exceed more than 183 days in any one year. So if you're away for 3 years, then you could spend more time in the UK in the first year provided the averages of the other 2 years allow it. But, to be safe, keeping it below 90 days in the first year means that if you only stay away for that year, you're within the rules and can comfortably claim non-residence, and not pay tax for any of that income.
It depends a lot on how long you think your job/life abroad will last...but you should try to start your new job prior to April 6th. If you fly out and start work on 11th, you will have to do the whole of this year to April 5th 2012 and then another full tax year until April 2013 before you can know that you will be definitely be non-resident according to the HMRC rules. If you know you'll be working abroad for at least this time to come then this is less important. However, if things change...for example you lose your job etc and have to return let's say March 2013...strictly speaking, they could declare you resident and tax you on all your income while you've been abroad, because you did not strictly serve a whole tax year (april 6th to april 5th) abroad, despite having been there for way more than 12 months elapsed time!
It's not quite that clear cut...I've heard that if you do return early, you can discuss it with them, and that they will take factors about whether you have cut ties in the UK, whether you intended a permanent or long term move into account(selling your UK property, selling cars, moving your family out etc are all good signs). But the point is...you have to correspond with them putting your case and they have to make a decision, and it may not go your way. You'll not be sure where you stand, unless you obey their stipulations about being abroad for an entire tax year to the letter...leaving them no where to argue.
As a result of the advice I received, I made sure my job started on 4th April 2009, and flew out on 3rd! This ensured that I would meet the conditions of non-residency for that first year, provided I was still working abroad after 5th April 2010.
I would be very interested in other PH'ers opinions on this area, as it's the usual wooly 'don't-know-where-you-stand' HMRC b*llocks.
Cheers,
J.
Edited by jezzaaa on Sunday 27th February 10:46
cheers j, that is a very useful post.
i believe i need to see my accountant to discuss in greater detail. i went the ltd. route when i started contracting in july 2010, so my books aren't due until later in the year with tax payable in april 2012.
tbh, starting on the 11th april is pushing it, i would prefer if i can prolong this to give me 8weeks from today.
however, given the 90day rule, if i started on the 11th, wouldn't the 5 days from the 6th-11th just be lumped in with that?
either way, i doubt this will be much of an issue so long as my accountant squares off my outstanding liabilities. the CGT things is more of a worry.
i believe i need to see my accountant to discuss in greater detail. i went the ltd. route when i started contracting in july 2010, so my books aren't due until later in the year with tax payable in april 2012.
tbh, starting on the 11th april is pushing it, i would prefer if i can prolong this to give me 8weeks from today.
however, given the 90day rule, if i started on the 11th, wouldn't the 5 days from the 6th-11th just be lumped in with that?
either way, i doubt this will be much of an issue so long as my accountant squares off my outstanding liabilities. the CGT things is more of a worry.
When I left the UK in 1998 (so maybe what I say does not apply anymore) I continued to pay tax for the rest of the tax year because I was only supposed to out of the country for 5 or 6 months. Anyway I ended staying out of the country for over 12 years and counting. I simply filled in a form requesting the return of tax that I paid. Low and behold a few months later a nice little cheque arrived in the post.
shirt said:
how so?
unless there is some kind of catastrophe i can't see why i'd be coming home inside 2years.
i could be in a position to leave in the current tax year IF i go all out balls-to-wall to tie up all my loose ends in the meantime. i am just not sure what the benefit would be.
Hi mate - expectation and sod's law sometimes conspire! If something unexpected does happen and you come home early, it's possible that you might fall outside the strict letter of the rules due to not doing the tax year in full. That's not to say HMRC might still agree that you were non-resident due to your circumstances...just that you have to jump through the hoops and have the worry that they might decide you were resident. And your re-course then...go to tax commissioners etc. It's all hassle and expense.unless there is some kind of catastrophe i can't see why i'd be coming home inside 2years.
i could be in a position to leave in the current tax year IF i go all out balls-to-wall to tie up all my loose ends in the meantime. i am just not sure what the benefit would be.
It's a good point you make about including the days from 6th-11th within the allowed 90 days. I guess if you're not working in the UK for those days, that might be acceptable. As you say...a trip to the accountants would be a great idea
J.
Edited by jezzaaa on Tuesday 1st March 05:52
From HMRC FAQ's..
"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."
You need to get out of the UK before the 6th April. It's then ok to "visit" but not be "resident". Otherwise you'll definitely need to be out until April 2013 (HMRC will nail you otherwise).
"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."
You need to get out of the UK before the 6th April. It's then ok to "visit" but not be "resident". Otherwise you'll definitely need to be out until April 2013 (HMRC will nail you otherwise).
Dan Friel said:
From HMRC FAQ's..
"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."
You need to get out of the UK before the 6th April. It's then ok to "visit" but not be "resident". Otherwise you'll definitely need to be out until April 2013 (HMRC will nail you otherwise).
"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."
You need to get out of the UK before the 6th April. It's then ok to "visit" but not be "resident". Otherwise you'll definitely need to be out until April 2013 (HMRC will nail you otherwise).
Couldn't have said it better myself (and didn't!)!! Cheers Dan.I would point out the 'normally' bit of that statement, which could indicate some flexibility...but I'm more inclined to believe that it's just the revenue's usual need to drape everything in ambiguity! I don't trust HMRC not to try and screw people at every turn, which is why I was very careful to be away before 6th April, in case the unexpected happens and I had to come home early.
Edited by jezzaaa on Tuesday 1st March 11:34
Mattt said:
The non dom rules are pretty wooly, but I always took the whole tax year to be concrete.
As others said, you never know what is going to happen, and you'd have a huge financial risk hanging over you until you finally did your whole year I.e. almost two years
I agree. Obviously I don't know the OP's circumstances...but for the sake of 6 days, I'd be making sure I was out of here and started in the new job before 5th...even if that meant having to take a weeks leave and fly back again after starting the job to sort out UK issues etc. As others said, you never know what is going to happen, and you'd have a huge financial risk hanging over you until you finally did your whole year I.e. almost two years
Dan Friel said:
I "think" the OP could start work abroad on the 11th, but would need to have finished UK work on the 5th and not be in residence anymore. A "research" trip to somewhere warm and sunny starting on the 5th?
I suspect you're right...but I think he doesn't want to leave the UK earlier as he has loads of stuff to sort out before going. I completely understand that...it's always a busytime emigrating I'd actually prefer to get out there in march, as this would make me eligible for the annual pay review in july. however I need to get my house on the market first, and it needs carpets, electrics, decor and landscaping! even with tradesmen lined up, family here at weekends and an average of 5hrs sleep a night I'm pushing it to be finished by the end of the month. I did want a couple
of weeks off to relax before the move but that's well out the window now!
I'm seeing my accountant on monday so I'll know better then. I'm hoping that finishing work on the 5th will help.
of weeks off to relax before the move but that's well out the window now!
I'm seeing my accountant on monday so I'll know better then. I'm hoping that finishing work on the 5th will help.
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