Just because you move abroad doesn’t mean you escape the UK tax net. You need to become ‘not resident’ in the UK for tax purposes, which is not as easy as merely living in another country. You can be treated as resident for tax purposes in two or more countries at the same time.
For years before 2013/14 you had to make a ‘clean break’ from the UK, and not return to the UK for regular visits, to be considered not resident. A full-time job working abroad was a pretty sound indication you had left for a permanent purpose, but you still had to limit your visits back to the UK.
If you had no full time job to go to, the taxman would look at your UK ties such as bank accounts, investments, family location, membership of clubs etc. Just counting the number of days in this or that country would not add up to non-residence if the centre of your interests remained in the UK. A number of recent tax cases has shown that the widespread understanding of ‘how to become non-resident’ was not supported by HMRC or by the courts – HMRC have successfully come after people who had thought their income, and particularly capital gains, were not taxable.
From 2013/14 a series of new rules applies to help you decide if you will be definitely resident or not resident in the UK for a particular tax year. You will be not resident in the UK if you fall into any of these situations:
- Working full-time abroad and present in the UK for fewer than 91 days, with no more than 21 days working in the UK; or
- Present in the UK for fewer than 46 days, and not resident for all of the previous 3 tax years; or
- Present in the UK for fewer than 16 days, and not resident for one or more of the previous 3 tax years.
You’ll need to know your residence position for earlier years before you can use the second or third tests to decide if you’re not resident for 2013/14.
If these tests are not met there are further hoops to jump through, which involve counting days and depend on where your ‘home’ is. We can guide you through these new rules if you’re planning to leave the country.