Self assessment advice for returning expats

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Date: 3 June 2020

Airport arrivals sign

Whether COVID-19 has uprooted you or it's just time to return to the UK, it's important to put the relevant tax measures in place first. Almost every year, expats return to the UK only to find themselves at odds with HMRC.

In most cases, this is due to unfamiliarity with new tax laws or laws that wouldn't have been applicable to you prior to your departure. However, that won't be enough to avoid HMRC penalties.

So, to help keep you on the right side of the taxman, we've asked Mike Parkes from GoSimpleTax to cover the key all considerations for expats returning to the UK.

Brush up on the changes

It may not feel like there have been any key legislative changes that an expat will have missed over the last decade. However, when you consider the introduction of the following changes, you may wish to seek professional advice when returning to the UK:

Determine whether or not you are a UK resident

Residency depends on the results of the statutory residence test. Essentially, if at any point in the tax year an individual fails to meet the overseas test and meets either the sufficient ties test or automatic UK tests, they will be regarded as a resident in the UK.

The exact date someone becomes a resident can depend on whether they qualify for split year treatment.

HMRC want you to run the tests in a specific order:

  • Automatic UK test
  • Automatic overseas test
  • Sufficient ties test

If you're deemed to be a UK resident, then your worldwide income will become taxable in the UK – assuming you are also domiciled in the UK.

There have been changes to the deemed domicile rules too. So, if you left the UK and have been making tax plans around returning, you should first check that recent changes do not affect these. We would recommend speaking to a tax professional in this case.

Additionally, if you're returning to the UK within five years of leaving, this may also have an impact on tax on certain income and gains. Again, always check with a professional advisor before returning to the UK to avoid any unwanted tax bills.

Registering for self assessment

It may be that, before you left the UK, you did not qualify for self assessment. However, if you now have foreign income, depending on the amount, you may be required to register. Unless you are self-employed, you'll first need to apply for your 10-digit Unique Taxpayer Reference (UTR) number. This can take up to ten working days to arrive to you should bear in mind as you will need it before the 31 January tax return submission deadline.

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Once you've received your UTR and registered for HMRC's online services, you'll be able to file your self assessment tax return. Use this to detail all the foreign income that qualifies for taxation. If your total income stands below your 2020/21 Personal Allowance of £12,500, you won't be expected to file. Neither will you be expected to file if your foreign income falls within your £1,000 trading allowance.

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