Tax Partners, Heather Thompson and Donald Simpson, give advice on tax matters for expats. Watch Heather and Donald's video here on Expat tax advice.
Donald: "From 6th April 2015, Capital Gains Tax is being extended so that non-residents, including expats, will become liable for Capital Gains Tax on sales or disposals, such as a gift, of UK residential property. The government is still consulting on these changes and we expect that it will only be future gains from 6th April 2015 onwards that are subject to tax, but it's an area that non-residents should keep an eye on. In particular, non-residents who are likely to come back to the UK in the future, and still hold onto properties and sell them once they're back, should be taking advice just to make sure they're in as good a position as possible."
Heather: "People who've left the UK and lived abroad long enough to be not resident here do still need to think about whether they have a requirement to file a return in the UK and, broadly, if they have income from sources in the UK or they have capital gains from assets in the UK, they will have to complete a tax return of some sort. Often people, who move abroad, keep property here; very often it's property, which is rented out, and in those circumstances they would have UK source income, which would require a tax return. There's a special scheme for non-resident landlords, where they can have that income paid to them gross. So, these are all things they need to consider."
Donald: "Expats should plan ahead before they return to the UK. In certain cases, they may qualify for 'split year treatment', so they may be treated as being UK tax resident only from the date in the tax year, when they actually return to the UK, rather than for the whole of that tax year; but there are set criteria in the legislation that say when split year treatment applies and when it doesn't. So, it's important for expats to know if they will qualify for split year treatment, and to figure out when their UK tax residence will start, so they can take action before they become UK tax resident to restructure their investments and assets, so they're in as good a position as possible once they become UK tax resident."
Heather: "It is important to plan ahead for this and the sooner they can start thinking about structuring their interests then the more likely they are to be able to come up with an effective solution. So, there are various options for expats going abroad – holding assets through companies, through trusts and holding them directly, spreading them round the family; it really depends on the circumstances but the key is really to look at it in plenty of time to make sure they've got the proper structures in place."
Donald: "The rules on when somebody is and is not UK tax resident is now laid out in legislation, which is actually new for the UK. Those new rules came into effect on 6th April 2013 and they give certainty to tax payers on whether they are UK resident or not. The details of the rules can be quite complicated, and there are various traps, which you can fall into if you're unwary, especially if you still have a home in the UK but another home abroad, which is your main home, or if you spend time working in the UK."
Heather: "Increasingly, clients are coming to us looking for advice on leaving the UK, coming back to the UK, holding assets in the UK and we're happy to advise on all these issues."