UK Expats: Important Tips to aware before you Establish Residency in a New Country
Even if you haven’t lived in the UK for some time now, you’re still subject to UK tax rules, unless HMRC deems otherwise. What most UK expats are not aware of is that the arm of the tax man can reach them, regardless of the distance they put in between. This is why establishing a non-UK domicile is important.
To succeed, UK expats must pass some tests, one of which includes giving up his domicile of origin, because they’re not allowed to have two domiciles. They must also show that their new home overseas is permanent, and they have no intention of ever returning to the UK on a permanent basis. There are some things they must relinquish as well, such as the right to vote, and to own a burial plot.
Do you think you can do all these? It’s not like you can’t visit the UK, however. You’d still be allowed to step on UK soil, but as a tourist rather than a citizen. To help you make a sound decision, you should understand the importance of establishing residency abroad.
Find out how much tax your owed with our UK tax refund calculator
As already mentioned, a non-UK domicile will keep you safe from the UK tax man. If you can prove that you no longer have connections, he can no longer charge you with 50% tax on your world income. If your country of choice happens to have lower taxes than the UK, you hit the jackpot. The only time you are liable for a UK IHT is if you own a property in the UK. Since part of showing commitment to your new country is to dispose of your family home, and sever all business and social ties in the UK, you won’t have to deal with UK IHT either. This means you’re fairly out of reach of the UK tax man. Now all you need to do is find a company that can help a UK national file a tax refund in your new domicile.
You Will Find Various Opportunities
Whether you intend to work or start a business, establishing residency gives you access to plenty of opportunities and advantages. You won’t have a problem owning a property, for example, since you’re no longer considered an alien. Since most foreign countries have strict rules on foreign property ownership, being a permanent resident frees you from such restrictions. Whatever the locals enjoy, you will enjoy too.
Transfer of Trust
Once you drop your UK domicile you can easily transfer assets into trusts without incurring a 20% chargeable transfer. If you still have properties in the UK, you can just convert them into non-UK assets and then set up a trust where you can transfer such assets.
Establishing residency in a new country will change your life forever, because you need to embrace your new domicile and renounce the original one. This also involves a lot of work since you need to change a lot of things, from your driving licence to your gym membership club. Suffice to say that before you can officially call yourself a local, you have plenty of legwork to do and documents to comply with.
Where tax is concerned, however, you can rely on a company that provides tax return services for a broad demographic. Since your case is different now than when you were a UK resident, you must work with a firm that specialises on your needs.