The tax system in the UK is, dare we say, a bit of a minefield, and we will be pleased to answer any questions you have if you are planning a move to the UK, or if you have been in the UK for a while already.

Brief Summary
The tax year for individuals in the UK runs from the 6th of April to the following 5th of April, and the Inland Revenue is the body responsible for the administration of the tax system. UK tax is generally payable on:

• Income that arises in the UK, irrespective of the residence of the person to whom the income belongs.
• Income that arises outside the UK that belongs to UK residents.
• Gains arising on the disposal of assets anywhere in the world that belong to people who are resident or ordinarily resident in the UK.

If you are coming to work in the UK you can expect your employer to ask for mysterious details such as your National Insurance number, and you may be asked to complete certain forms. It is worth noting here that if these are not provided you will almost certainly have the incorrect amount of tax deducted from your pay, as the employer will deduct tax from your pay using what is called an Emergency Coding. However, once you become a UK-resident you are entitled to a personal allowance, which means that you can earn up to a certain level of income before you start paying tax. For tax year 2001/02 the personal allowance is £4535, and is available in full irrespective of the date on which you become a UK-resident.

We would therefore encourage the early completion of an Inland Revenue form P86 that helps establish your tax position - contact us if you require help with this, or if you think you may have overpaid tax.

Tax Status
The UK operates a system of Self Assessment and as such individuals certify their residence and domicile by completing the Non-Residence supplement to the Tax Return (for the 2001 Tax Return supplements and supporting notes click here) and submitting it with their personal Tax Return.

Click here for the notes to the Non-Residence supplement which provide more guidance and give a pointer to tax status.

In broad terms, when determining your tax status as an individual coming to the UK the Inland Revenue will firstly consider whether you have arrived permanently/indefinitely, or whether the visit is temporary.

• You will be treated as resident and ordinarily resident from the date of arrival if you intend to come to the UK permanently, or to remain here for three years or more.
• The position for short term visitors is more complex. Broadly, you will be treated as a resident for a tax year if you are in the UK for 183 days or more in the tax year. Failing this, if you visit the UK regularly and after four tax years your visits average 91 days or more per tax year you are then normally treated as resident from the start of the fifth tax year.

Earned Income - The Year of Arrival
An extra-statutory concession (number A11 for the technically minded) deals with the situation where an individual comes to the UK part-way through a tax year - you do not pay UK tax on any earnings for that part of the year preceding your arrival, so long as these are from an employment carried on wholly overseas.

Investment Income
This typically includes interest from bank and building society accounts, dividends on shares, rental income, etc.

Once you have become resident in the UK you will usually pay UK Income Tax on all of your investment income, wherever it arises. Note that the special remittance basis applies to overseas investment income if you are either:

• Resident but not domiciled in the UK, or
• Resident but not ordinarily resident in the UK, and either a Commonwealth citizen, or a citizen of the Republic of Ireland.

In the year of arrival in the UK overseas investment income arising before the date of arrival is generally ignored, in the same manner as earned income discussed above.

You should have some comfort in that any overseas tax on investment income deducted in the country of source will generally be credited against your UK tax bill.

To request further free factsheets please click here.

Coming to live or work in the UK? - contact
Collett & Co Chartered Accountants