from the blog.

How To Avoid UK Tax Penalties

How to Avoid Penalties Due to Failure in Filing a Tax Return on Time After Returning to the UK

When you leave the UK to work or live abroad, you must inform HMRC about your plans, so your residency for tax purposes will be changed accordingly. Otherwise, you will be paying UK tax on your foreign income.

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If there is no double taxation agreement that exists between the UK and the country you are relocating in, you could end up paying both UK and foreign taxes on your income. This will definitely bore a hole in your pocket.

The moment you return to the UK, however, you will have to do everything in reverse, which can be tiring. So, if your stint abroad is temporary and just for a short while, you can leave things as it is, so you can be classed a UK resident again the moment you return. No need to change your residency again.  Whichever is the case, it is important that you file your tax return on time the moment you return to the UK.

Failure to do so can mean:

  • An automatic penalty of £100, even if you don’t owe any tax yet
  • A £10 daily charge, up to a maximum of £900, will be imposed if you still don’t file after 3 months
  • More charges will be added after 6 or 12 months

All these can total up to £1,600 of penalties, even if you did not pay any taxes since you have returned to the UK.

When should you file a tax return?

The filing dates depend on whether you are sending a paper tax return or online tax return. You must send your paper return by 31 October, so that HMRC can calculate your tax bill and let you know how much you have to pay by the payment date on 31 January. If you send it even just a day later, HMRC could not guarantee to let you know the results at the right time. In the event that you really cannot send it on time, refer totax agents in Hammersmith, as they can cater to your needs at any time.

If you file your tax through the HMRC return online service, you must register earlier or a week before 31 January since it will take up to 7 days before you get a Personal Identification Number that you must use. Again, a quicker alternative would be to seek help from tax experts.

Do you need to register for Self-Assessment?

Yes, if you are self-employed or have other income and gains from either the UK or abroad. The only exception is when you are an employee and don’t have untaxed income to report to HMRC.

What do you need to do if you return to UK within 5 years?

You still need to file a tax return, even if you do not owe any income tax. But if you brought in foreign income or gains into the UK, you may have to report and pay tax on them, especially if the temporary non-residence’ rules apply to you.

That is, you returned to the UK within 5 full tax years, if you left the UK before 6 April 2013, or within 5 years of moving abroad. You must also be a UK resident in 4 of the 7 tax years prior to you relocating to a foreign land.

To ensure that you do not get penalised, file your tax return on time and have more chances of getting a UK tax refund, under certain circumstances. Save yourself the headache, speak to a tax agent.



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