On the move? Some useful tax tips for British ex-pats

22 May, 2019 | Posted By: Michael Doherty

THE uncertainty over Brexit has persuaded many Britons to move to an EU country, such as Cyprus, where they hope for a secure future.

But there has also been a steady trickle moving in the other direction who are concerned, in particular, about how much tax they may pay if their home country is no longer in the European Union.

Such fears are unjustified. Whatever other problems an expat may face after Brexit, a bit of careful planning should ensure that tax is not one of them.

Moving back Britain also requires planning, particularly if some of your income is coming from Cyprus or some other country. Much will depend on whether your status is that of a UK resident or non-resident.

If you are a UK resident, you’ll be entitled to a personal allowance, which is the amount you can earn each tax year without paying income tax.

In the current tax year, the personal allowance is £11,850. Earnings above this amount (up to £46,350) are taxed at the basic rate of UK income tax: 20%. Income between £46,351 and £150,000 is taxed at 40%, while income above £150,001 is taxed at 45%.

If you’re a non-resident, you’ll pay tax on your UK income but not on any foreign income.

You’re considered a non-resident if you spent less than 16 days in the UK in the tax year, or fewer than 46 days if you haven’t been classed as a UK resident for the previous three tax years.

You’ll also be considered non-resident if you work abroad full-time and spent fewer than 91 days in the UK. Of these 91 days, no more than 30 can be spent working.

There are special rules for UK residents whose permanent home, or domicile, is abroad. Domicile determines a person’s liability to
inheritance tax, which is charged at 40% on the value of your estate over the current £325,000 IHT threshold.

If you are domiciled in the UK, you may be liable to UK inheritance tax (IHT) on your worldwide assets. However, if you’re not domiciled in the UK, you’ll only be liable for IHT on any UK assets.

Understanding whether you are domiciled or resident in the UK is not straightforward, so you should take advice from a qualified adviser.

In general, tax rules can be extremely complicated so it’s vital to
seek expert advice if you’re not sure which taxes you’re liable for, or how much you’ll have to pay.

And expats moving in either direction need to ensure that their wealth is working for them in the most tax-efficient way.

You should always seek advice from an independent financial adviser who will be able to talk you through your options.

My company, the Woodbrook Group, is an international firm of financial advisers. We are not owned by any financial institution or life insurance company and can offer you unbiased and impartial advice.

Our approach to comprehensive financial planning and investment ensures our clients’ wealth is preserved, protected, and maximised tax-efficiently.