MKG2412

Hi All

After 20 years of working abroad we are looking at retiring back to the UK. Could anyone advise whether the "old rule" of coming back into the UK at the start of a tax year is best, still applies? Or can one come back any time of the year? i.e would it be Ok to come back mid way through a tax year?

We pay tax on our income in the country we live in. We are non-resident for UK at the moment, but this will change once we come back to being resident again.

We will not be working - how will it go with the tax system in the UK? Will we have to be on emergency tax codes? Implications of that?

Will we also be taxed on our earnings, up until we leave, where we are now although we have paid our tax in that country?

Any enlightening advice would be appreciated on this one as we want to make sure our sums will add up at the end of the day.

Thanks in advance
Margaret

Pulaski

I don't believe that was ever good advice. I would recommend arriving far ahead enough of April 5 to receive enough income to use up your annual allowance. Just as when leaving the UK, you should optimally stay long enough to receive taxable income of at least your annual allowance.

durham_lad

I think it will depend on your personal tax situation.

In our case I have been re-structuring our finances in readiness to return to the UK from the USA for past 3 years. I deliberately had us return after the end of the UK 2016/17 tax year so that I could sell an investment in January to buy a house in the UK. The taxable portion of that investment would be treated as regular income in the UK and be taxed at a marginal rate of 40% by HMRC instead of at 25% by the IRS.

britcan1

Hi there,

I left the UK in 2005 after I married my spouse and moved to Canada. I'm not thinking of both of us going back to the UK. I haven't paid UK taxes since I left and haven't claimed any income that I've made in Canada.

Where do I start to research all of this? Also, what type of visa would my spouse need to apply for so that they can work once we move to the UK?

Hoping someone can help us begin our research.

britcan1

We too are looking to sell one of our properties so that we have money to use when we move back to the UK. We will most likely have to pay capital gains in Canada for this sale. Will we have to pay tax again if we bring this money to the UK?

Pulaski

Transferring the money won't create a tax liability.

If you are tax resident in the UK then there will be another CGT computation, which may look very different from the Canadian computation, due to foreign exchange, indexation, allowable deductions, etc.

You can claim a credit for any tax already paid in Canada, so the effect is that you total tax will be the higher of the tax levied by Canada and the tax levied by the UK.

britcan1

Not sure I'd be categorized as a tax resident in the UK. I haven't reported any foreign income since I left in 2006.

Pulaski

Roughly speaking, if you have already returned to the UK to live then you are are likely to be tax resident in the UK. .... Selling before you leave Canada will certainly be easier, and may be cheaper.

geogal

I have been resident in Malta since April 2008. Following my husbands death I am planning to return to the UK to live on 6/4/17. However, the Malta tax year ends on 31/12/16 and I was planning to relinquish my residency as of that date because I have been travelling in Europe and out of Malta since that date. This means that there is a gap between leaving Malta on 31/12/17 and arriving in the UK on 6/04/17. I don't know what I need to do with the gap. Does anyone know whether I will be liable for Malta tax, UK tax or what?

angie_329

Do you have income arising in Malta? then you will need to file your tax return in malta for 2016 by june 2017. any tax paid could be offset under double taxation agreement between malta and UK. if you lived on savings or capital in Malta then as a foreign resident no tax is due.
Or is it pension income?
with the uk you would only need to file a tax return/ self assessment by january of the following year (2018) if you have taxable income in 2016/2017 uk tax year. I expect an accountant can apportion the period of three months fromthe last uk tax year. Both Malta and UK have personal allowances before tax is paid and you can benefit from both.

geogal

Thank you for replying Angie_329. To answer your questions; I have files returner the basis year 1/1-31/12/16 and left Malta. I have no untaxed income arising in Malta. My income is my UK pension. I am currently in Europe visiting friends and staying in a holiday home. I am booked to return to the UK on 6/4/17 (at the start of a new tax year). I thought that by leaving Malta at the end of their tax year and arriving in the UK at the start of a new UK tax year this would make life simple, but now I am worried about how to deal with the gap when I am in neither country. My husband always dealt with this sort of thing-I think I've messed up. I don't know whether my return to the UK is when I am actually physically there or not?

angie_329

There is no need to worry, it is nothing serious. Now you are non resident anywhere so that's fine. If you are a returning UK resident you normally then become resident on day 1 of your return.

Pension income ( private) is normally taxed at source automatically in the country it arises in.

Is your pension taxed at source in the UK or Malta? Is this the UK State pension or a private pension? or both? Did you receive your husband's pension or half of it when he died?

When pensioners move abroad they have the option under dual taxation agreements of transferring the taxing rights to for example Malta. The UK then allows the private pension to be received with code 'NT' no tax.. but the tax is then paid in Malta at the usual rates.

Have a look at any statements you get from pension companies.

Of course this is not obligatory and many people do not do this.

you have a uk allowance and this is normally used to receive the UK state pension without tax in malta or UK. If your income is below a certain level and you are living on capital then you may not need to do a tax return in the UK at all.

geogal

Thank you - I have checked paperwork as you suggest. Pension Income is UK State and half of my husband's Company pension when he died.
We elected to pay Malta tax on this income. It was submitted once a year, generally in November when we were sure what the totals were. The UK tax code for this income is NT.
I have not sent any of this income to Malta since I left on 31/12. It has therefore been received in the UK at this point in time but I am not resident there yet. I would be liable to pay a very small amount of UK tax for the 3 month period if I it is taxed in the UK. Maybe I should contact hmrc to ask them what to do but the thought is a bit scary. Thanks for your feedback. I do appreciate the time you've taken.

angie_329

So you will need to eventually re - register in the UK to have the tax taken at source there on the private pension . Myabe when you informed Malta you were becoming non resident they automatically send the info to HMRC.

I will check the above with the accountant that did my relative's Dual taxation in Malta for his pension and find out what happens in reverse. I will get back to you via private message in a few days.

There is no need to rush or be concerned. I would advise using a local UK accountant to deal with HMRC when you return . This will take the worry away. He will do a self assessment return showing you have returned to be a UK resident, with the small amount to be paid for the gap (plenty of time to do this until end of 2017), and arrange for the future that it is taxed at source, as is usual. Your personal allowance will cover the state pension. Then you won't need to do any more tax returns probably! The accountant can ensure that happens so you don't get a reminder yearly.

Pulaski

She'll have her 2016-17 personal allowance so unless her income is over £10,600 for the period since 1/1/17 (to 5/4/17) she'll have no tax due anyway.