Leaving the UK to live or work overseas often happens without a thought to the tax issues you are leaving behind. However, at the very least you may be able to claim a tax repayment, and if you are letting your property you may find yourself financially out of pocket if you overlook the necessary paperwork.

If you're unsure what you should be doing contact us and we'll tell you how we can help.

Your Tax Status on Leaving the UK
Short trips overseas on holiday or on business trips have no effect on your tax status. However, if you leave the UK to live abroad permanently or indefinitely you will probably be considered to be not resident and not ordinarily resident from the day after you leave the UK so long as:

• You are absent from the UK for a complete tax year
• During the period of absence any visits to the UK total less than 183 days per tax year, and average less than 91 days per tax year.

On departure from the UK we recommend that you ask the Inland Revenue for form P85, which should help determine your residency status. The completion of this form will also help support a claim for the early repayment of PAYE Income Tax - the personal allowance is offset against salaried income as the tax year progresses and so if you leave the UK part way through a tax year you should be entitled to the balance of your allowances, generating a tax repayment to help you on your way!

Contact us if you need help with form P85 and claiming your tax repayment.

Specifics - The Split Year Treatment
An Inland Revenue concession applies to earned income so that you will not be taxed on income earned after you leave the UK from an employment carried on wholly overseas, even if earned during the tax year of departure.

The same principle applies to investment income, although:

• Tax will normally continue to be deducted from interest credited to UK bank and building society accounts after you leave the UK. However, if you are not ordinarily resident it is usually possible to sign a declaration form R105 so that interest may be paid to you gross.
• Dividends from UK companies will be paid to you net of a tax credit (equal to one-ninth of the amount you receive) - they will not be paid on a gross basis. This tax credit cannot be repaid to you.
• Net rental income from UK property continues to be taxable after you leave the UK, although you may be able to make use of UK personal allowances to absorb the net income and to reduce the tax payable to nil.

There is an added complication in that if you leave the UK to live abroad your tenant (if you have not appointed a letting agent) or the letting agent (if you have) must deduct tax at the basic rate from your rental income less the allowable expenses, and must pay this to the Inland Revenue. However, you can apply to The Centre For Non Residents (the special tax office that deals with these issues) for approval for your property income to be paid to you without tax being deducted.

You will also be expected to submit a UK Tax Return each year, even if the rental expenses exceed the rental income.

Contact us if you need any help with the tax aspects of your UK let property - we'll help you through the maze of tax compliance - and there are more details in the factsheet Moving Overseas and Letting a UK Property, and in the Inland Revenue's booklet IR140.

To request further free factsheets please click here.

Moving Overseas? Make sure you haven't forgotten any UK tax issues - contact Collett & Co. Chartered Accountants