For tax purposes you can leave the UK in two ways:-
- Permanently - You are leaving the UK to live abroad and will not return to the UK to live
- Indefinitely - You are leaving the Uk to live abroad for at least
three years, but may return to live in the UK at some future point.
If you are leaving the UK permanently or indefinitely you will only
become “not resident” and “not ordinarily resident” the day after your
departure if you have physically moved from the UK.
After leaving if you visit the UK for more than 91 days on average a
year, you remain “resident” and “ordinarily resident” in the UK.
If you retain property for you use in the UK, you may find that you have difficulty convincing HMRC that you have left the UK.
If you are leaving the UK to work as employee or be self employed
in another country then you will become “not resident” and “not
ordinarily resident” for tax purposes on the day after departure only
if the following conditions can be applied to your circumstances,
unless you have left “permanently” or “indefinitely”:-
- you are leaving to work abroad under a contract of employment for at
least a whole tax year - you have actually physically left the UK to begin your employment abroad
and not, for example, to have a holiday until you begin your employment - you will be absent from the UK for at least a whole tax year
- your visits to the UK after you have left to begin your overseas
employment will
- total less than 183 days in any tax year, and
- average less than 91 days a tax year. This average is taken over the
period of absence up to a maximum of four years
It is worth noting that for HMRc to be satisfied under the
conditions above the offer of employment outside the UK should have
been agreed before departure from the UK.
Under the decision reached in Read V Clark HMRC consider that:-
An individual who is not in the United Kingdom at any
time during a particular tax year is not normally regarded as resident
for that year.
Dividend Income
Dividend Income is paid with a Tax Credit of 10% of the Gross Dividend.
If you are not UK Tax Resident then you cannot reclaim this tax credit, and you will not pay any UK tax on UK Dividends.
You may have to pay tax in another tax jurisdiction and you maybe
entitled to a tax credit under a double taxation agreement between the
UK and the tax jurisdiction.
If you leave the UK part way through a tax year ( i.e. leaving on or
after 6th April ) you will be liable for UK Tax on all investment
income such as Dividends for the whole of the tax year in which you
left.
Income Tax on Earnings
Statutory concession A11 means that when you leave the UK part way
during a tax year either permanently or indefinitely then you will not
pay UK tax on your earnings from the day after your date of departure
from the UK.
Capital Gains Tax
Taxpayers who, having previously been resident or ordinarily
resident, for 4 of the last 7 tax years, become temporarily
non-resident for a period of less than 5 complete tax years will be
treated as if they had remained resident in the UK for capital gains
tax purposes.
Capital gains and losses accruing while the taxpayer was abroad will
be treated as if they had accrued in the year of return to the UK,
unless they relate to assets acquired while he was overseas. After 5
complete tax years outside the UK the Capital gains will not be taxable.
For those who leave UK tax residence on or after 16 March 1998,
capital gains tax will remain due on UK assets which were owned at the
date of departure and are sold whilst overseas, unless you remain
overseas for 5 complete tax years. If you resume UK residence earlier,
UK capital gains tax will be charged in the year when you resume UK
residence.
The date of non residence
By concession, you are normally regarded as becoming non-resident
the day after you leave the UK, even though this may be in the middle
of a tax year. A tax year starts on 6th April and ends the following
5th April.
This concession applies for both income tax and capital gains tax.
Technically, however, your UK residence extends for the entire tax year, ending 5th April after you leave the UK.
HMRC can refuse to apply the concession if they consider that you
have timed your departure, or entered into a transaction, specifically
to avoid capital gains tax. It can therefore be dangerous, for
example, to realise a capital gain on shares or property or on a
business soon after you leave the country. It is safer to sell your
assets in the tax year following your departure from the UK.
The only circumstance where the HMRC will apply the “split year”
treatment is if the individual was not UK resident and not UK
ordinarily resident for the whole of at least four out of the seven tax
years immediately preceding the year of departure.
P85
When you leave the UK you should complete form P85 and HMRC will
then confirm if they require a Self Assessment Tax Return to be
completed.
HMRC Guidance is available here