Question archive: overseas
No, the territorial scope of the UK for tax purposes excludes the Channel Islands and The Isle of Man.
In order to be regarded as a non resident employee, you need to go abroad for at least a complete tax year on a full time contract of employment; during the absence, return trips should total less than 183 days in any tax year and average less than 91 days a tax year. Specific non-incidental UK duties will be taxable.
The UK personal allowance is available for non-resident individuals who are also British subjects, European Economic Area nationals, Commonwealth citizens and those in the Channel Islands and the Isle of Man.
Citizenship does not determine domicile, it is only one of many factors.
However, adopting UK citizenship will certainly weaken your case for foreign domicile.
If you have significant offshore investments, then you should take professional advice.
Any gain from the disposal of your home will be fully exempt, if the house has been your only or main residence throughout the period of ownership. The last 36 months of ownership are always treated as a period of occupation.
Assuming the above applies, with the last 36 months being treated as deemed occupation, any gain on disposal is not subject to capital gains tax.
You need to get a form P85 from the Revenue when you leave the UK. If you are a commonwealth citizen, and coming from Australia you should be, you can claim the normal personal tax allowance that UK people do. This allowance should refund some or all of the UK tax that you have suffered to 5 April and to the date of departure from the UK.
Broadly speaking, as you are returning to the UK to retire the Revenue will regard you as resident and ordinarily resident from the date of arrival. The fact that you will be in the UK for less than 183 days this tax year is not particularly relevant, nor that you will be here for more than 91 days. Consequently, you will be taxed on income arising from the date of return.
This assumes that you are UK domicile. To the extent that you have paid foreign tax on income taxed in the UK you should be entitled to tax credit relief.
Thought should also be given to closing overseas investments prior to returning to the UK so as to minimise the amount of interest that occurs after you become resident in the UK.
One other point to note is that lump sums from overseas pension plans can be tax-free by concession; and that overseas pensions are only 90% taxable in the UK.
This is a brief response and you should obtain further advice.
Working outside the UK for a month you will still be regarded as UK resident for taxation purposes. Any income you receive from employment in Australia will therefore be taxable in the UK on an arising basis.
You may also pay tax in Australia on your earnings out there and you will need to refer to the double taxation agreement between the UK and Australia to see how this will affect you.
The first thing that you need to do is fill in a P86 (arrival in the UK) form which you will need to obtain from your tax office. Once this has been done, they will take it from there.
Your taxable status relies on where you are resident. The rules for ascertaining an individual's residency for tax purposes are complicated, but for these purposes let us assume that you are, as you say, resident in the UK. Let's also assume that some of your work will be carried out in the UK, and some abroad.
Your total worldwide earnings, wherever carried out (i.e. in the UK or abroad) will be subject to UK income tax because you are resident in the UK. If you pay foreign tax on any of your earnings which are also taxable in the UK you can claim tax credit relief for all or part of the foreign tax up to the amount of the UK tax chargeable on the same item of income. You will also be entitled to the normal tax-free personal allowances.
If you are non-domiciled in the UK you may be able to arrange a separate contract for your overseas duties, such that any income paid relating to those duties will only be taxable in the UK when actually brought here. This concept, known as the 'remittance basis', and the concept of 'domicile', are both complicated and technical areas and further advice is, therefore, essential before taking any such action.
Finally, your employer may have agreed a 'tax equalisation' programme with the UK Inland Revenue. Again, the rules relating to this are complicated and further advice should be sought.
This page was last reviewed on 07 July 2004. The information may not reflect changes in legislation made after this date.
This is only a guide to your tax position and should not be relied on in place of professional accounting or tax advice. Any calculated figures are illustrative and are based on the data you provided.
