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Taxation if moving abroad mid year

Practical Issues
zxc100
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Taxation if moving abroad mid year

#439328

Postby zxc100 » September 2nd, 2021, 9:34 pm

I would be grateful for any guidance on the need to complete UK tax returns and how tax becomes liable for someone moving abroad for about 2 years.

My son is shortly heading off to New Zealand where he plans to stay and work, initially for 2 years. Having already worked and paid PAYE in the UK for 4 months this year we are not clear if he still needs to complete a UK tax return to report foreign income and a very modest dividend income that will arise while he is abroad. Is he still entitled to a full personal allowance here and would that mean he might get a refund of tax? Probably a bit optimistic. Does he need to report income earned in NZ to HMRC even though he is no longer in the UK?

We have tried reading the gov.uk website but frankly are none the wiser. Any pointers on where else to read or advice would be really appreciated.

zxc

richlist
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Re: Taxation if moving abroad mid year

#439337

Postby richlist » September 2nd, 2021, 10:12 pm

If he is working abroad with the same employer its reasonable to expect them to sort out the tax position for him.
If not, you could talk to an accountant.

BBLSP1
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Re: Taxation if moving abroad mid year

#439383

Postby BBLSP1 » September 3rd, 2021, 8:33 am

It’s not clear if it is the correct documents which you cannot find at ‘gov.uk’ or whether it is the understanding of them. Regardless, here are links to some relevant pages.

https://www.gov.uk/tax-foreign-income/residence

https://www.gov.uk/government/publications/rdr3-statutory-residence-test-srt


The rules rely on specifics and each person’s case will be different. So here only generalisms can be observed. These are:

The first task is to establish residence status (UK resident or UK non-resident) for each tax year in question.

It may be noted that the so-called split year treatment is used where a person moves abroad or returns to the UK part way through a tax year. Under this, the portion of the year spent abroad may be considered as non-resident.

However, it is necessary to spend at least one whole tax year abroad to achieve this. i.e. back-to-back split years of going abroad and then returning within either the same or the next tax year will not make you non-resident, there must be a minimum of one whole tax year sandwiched in between.

If non-resident, no need to declare your overseas income, just the country where you are.

However, any UK income – also interest, unsheltered share dividends, rent, cgt etc. is to be declared. A personal allowance can still be used; however, there is an option to forego the allowance without certain income then being taxed and it has to be decided which is best for you.

https://www.gov.uk/tax-uk-income-live-abroad

The country you are in may want to tax your UK income; this could be off-set via any double taxation treaties that may exist.


I re-iterate, the above are general observations and may vary dependant on the specifics of each case.

A further important point is to try and keep UK bank accounts etc. open, as these days it is frowned upon for non-residents to have such things. Discretion is the best option here.

zxc100
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Re: Taxation if moving abroad mid year

#440176

Postby zxc100 » September 6th, 2021, 10:24 pm

Thank you very much. For some reason we had seen different sections but the pages identified give a much better picture. It would appear that the splitting of the tax year is the way to proceed. This then seems to suggest that a tax return needs submitted even when non-resident. He will clearly need to familiarise himself of the foreign tax arrangements with regards to his UK investment income.


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