If you
are leaving the UK, perhaps to work abroad or to escape for a new life in the
sun, there are some important tax matters to plan for.
The
timing of your departure from the UK and arrival in the destination country can
have a significant effect on your tax position in each country, and can provide
planning possibilities regarding the timing of asset disposals and income
receipts.
New tax
residence rules from 6 April this year are designed to correct the
lack of clarity under the previous rules. The new rules use several
automatic tests to determine your residence status, which should make it
easier to plan your number of visits to the UK to avoid remaining
UK-resident. For example, you will be regarded as automatically
non-resident if you are present in the UK for not more than a
maximum number of days in the tax year; the maximum depending on whether
you have been resident in any of the three tax years before you left, and on
whether you have gone to work full-time abroad.
The
rules also prescribe situations where you are automatically UK-resident in a
tax year. In other cases your residence status is determined according to
the number of ties you keep with the UK such as family, accommodation,
work and whether you were UK-resident in either of the two previous tax
years.
Matters
such as dual residence may also need to be considered if you become resident in
the destination country while also remaining UK-resident. In this case the matter can usually be decided
for double tax treaty purposes under special rules in the treaty between the
two countries, assuming there is one.
Inheritance
tax should not be overlooked, since if you are UK-domiciled you remain subject
to UK IHT regardless of where you are resident, whereas other countries may
charge IHT according to residence.
Proper
advice should therefore be obtained both in the UK and the destination country.
01932 830664
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