UK Expat Tax Planning
If you live or work overseas, or are planning to do so, your tax status will almost certainly be affected by your change of residence from the UK to overseas. A common misunderstanding of UK expats is that when they move abroad they are instantly exempt from UK tax. There are rules as to when a UK expat has to pay, and which kind of tax, even if living and working abroad.
Do I have to pay UK tax when living and working abroad?
Your tax liability in the UK depends on your tax residence and domicile status. The tax residence and domicile are influenced by things such as the source of income and capital gains, where your other assets are located and the length of your time spent in the UK.
In order to be classed as a non-resident and exempt from UK income tax on your foreign income, you will need to:
- Work abroad for at least one full tax year;
- Spend no more than 182 days in the UK in any tax year, and;
- Spend less than 91 days in the UK on average over a four-year period
However, as non-residents, you will still be charged income tax arising from a source in the UK. Moreover, from 6th April 2015, expats and non-residents who are selling a UK property will owe capital gains tax on any gains made.
Double taxation agreements
The UK has double taxation agreements with many counties, and if you reside in one of these, this treaty will work in your favor, restricting UK taxation rights to your income there. However, income from UK property and overseas property will be taxable in the UK regardless of any tax treaties.
Double taxation agreements come in handy when setting up retirement plans abroad, or making investments (especially if that country is Hong Kong, as it has no taxation on pension income and low tax on income).
UK Inheritance Tax is chargeable to non-residents, on a worldwide basis
At Platinum Financial Services, we use the Soteria Trusts brand to market our Inheritance Tax solutions. If you are UK domiciled at death IHT is payable on the entire value of your worldwide estate. There is a nil rate band, meaning that tax is levied at 0% on the first £325,000 per person or £650,000 for a couple upon death. However, all assets valued above that are taxed at a flat rate of 40%.
Being non-UK-domiciled can save your worldwide estate (houses or investments outside of the UK) from IHT, however, any assets within the UK will actually still be liable for IHT, whether you are domiciled there or not.
If you consider the fact that IHT will be assessable on your worldwide assets at death, it often comes as quite a shock to many British expats, as well as foreign UK property owners who entered the prospering property market there, that they will leave a great deal less to their heirs than they had envisaged.
How can Platinum Financial Services help?
Protecting your wealth is the goal of Soteria’s IHT Planning Service.
We will guide you through the planning process and advise you on the best possible solutions tailored to your specific needs.
Get in touch with us today and we can advise you on the most efficient way to legitimately reduce your IHT liability.
Protect Your Savings
In case of a sudden illness or accident, you don’t have to utilise your savings to pay the high price for medical treatment. Surgery and room costs in Hong Kong’s private hospitals can easily reach US$100,000 for major heart disease and cancer. This can be covered by the insurance plan, should you have coverage in place. Your savings should be used for their intended use, such as buying a home, funding your children’s education and retirement.
ANDREW CASE STUDYThe cost of quality healthcare is at a premium. We have close partnerships with market-leading international healthcare insurance companies that offer sustainable products making sure that we can match the required level of cover to your budget.
We don’t charge you for our services, so premiums are the same as going directly to the insurance company. What you get is advice on the plan’s benefits and coverage limits that make sense to you and your financial situation.
Don’t leave your financial future to chance.
Contact Platinum Financial Services to help you through your financial journey.
