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UK Tax Residency yes/no?

UK Tax Residency yes/no?

Old May 1st 2018, 7:46 am
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Default UK Tax Residency yes/no?

Now we've been in Malaysia a full tax year and well over an actual year I was since last years returns are now due and I've started the process of completing them considering if I should become non tax resident in the UK. I am pretty certain I know how to tell HMRC vis-√ -vis tax residency there appears to be an online form for that, I am just not sure if the pros & cons work out or even if they will consider me non resident if they do.

For Mrs B. I expect becoming non resident would be unchallenged, she's still a Malaysian citizen, her UK house is rented out on a long let and apart from the rental income she has no earnings in the UK other than a few pounds of bank interest. As with me her UK mail is sent to a friends address where we stayed for a little while after the house was rented before leaving the country, our friends deal with that mail for us sending via WhatsApp anything that looks important and as far as is possible we've put everything to electronic documentation.

I expect I might be challenged, I still do a little contract work for my previous employer via my UK company this has me as a director of a one man band company, the amount of work is really fairly small maybe a couple of days a month and dealing principally with clients outside of the UK but not in Malaysia. As with Mrs B the main source of any UK income is from a rental property again on a long lease.

As far as I can see we're liable for UK income tax in any event either we're resident or the the income is UK based so no saving to be made there. The houses since they're now rented will be liable for capital gains if sold in either case unless we have 5 clear years of non residency and then sell (that appears to be the only advantage I can see) other than taking company dividends as a non resident director but the amounts are so small. Whereas the biggest disadvantage is the loss of the waiver of death duties on UK assets between spouses when one of us falls of their perch, of course that's moot if we hang on another 5 years plus and sell up. Also with the current cock-up over the windrush folks does Mrs B risk losing her right of abode if she becomes non resident bearing in mind all the kids live in the UK.

I've got my Malaysian tax number should I need it, so far my LTSVP second time was issued for 12 months, I don't know if I will get longer or not when it's due to be renewed in July[1] but on short term visas will it be harder to convince UK authorities we're gone for good?

At the moment I am blowing hot n cold, anyone any thoughts guidance, done this themselves?

[1] the passport it is in currently only runs until 2020, although I have another just now issued until 2028 but don't know if the immigration here will allow a simple transfer when I've got two UK passports

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Ian
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Old May 3rd 2018, 2:01 am
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Default Re: UK Tax Residency yes/no?

You probably need to talk to a UK tax accountant about this to work out what is the best thing to do financially. As an example if one becomes a non UK tax resident then while UK rental income is foreign income in Malaysia and therefore non taxable, a withholding tax rate of 20% is applied (that was the case in 2014/2015 so may be different now). As a non UK resident there is no tax free allowance so depending on the rental amount you could end up paying more tax as a non resident than as a resident. There are also the capital gains tax on any future sale to consider as well as any inheritance tax that may apply. Pretty complicated so getting proper tax might be worthwhile.
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Old May 3rd 2018, 2:20 pm
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Default Re: UK Tax Residency yes/no?

Originally Posted by simon2017 View Post
As a non UK resident there is no tax free allowance.
As a British citizen you still get the Personal Allowance, even if non resident.
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Old May 4th 2018, 3:42 am
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Default Re: UK Tax Residency yes/no?

Thanks folks, the not getting a personal allowance would have swung it I think, the rental income isn't huge so getting £11k free of tax is well worthwhile now I am conflicted again. Shall keep mulling it over, perhaps see how long I get on my LTVSP when it is renewal time.
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Old May 4th 2018, 12:08 pm
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Default Re: UK Tax Residency yes/no?

Originally Posted by Nakrob View Post
As a British citizen you still get the Personal Allowance, even if non resident.
‚Äč‚Äč‚Äč‚Äč‚Äč‚Äč‚ÄčThere is a difference between being a UK citizen and UK resident though.

The UK Gov website says that there is a special form required for those non-residents that wish to claim the UK Personal Allowance (Form R43).

https://www.gov.uk/tax-uk-income-liv...onal-allowance

The guidance notes might actually give you the information that you are looking for to make a determination. Having gone through this in the past you can never get a straight answer out of financial advisers since HMRC refuse to issue definitive determinations for both residency and domicile and require individuals to self-assess their own residency and domicile status, while at the same time retain the right to make their own determination (pretty much always that which delivers them tax income)

This is not to say you shouldn't speak to a tax adviser. Just don't take what they say as anything other than guidance.

HMRC Guidance for Form R43 (2018)
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Old May 4th 2018, 8:55 pm
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Default Re: UK Tax Residency yes/no?

Originally Posted by kingoflostfools View Post
The UK Gov website says that there is a special form required for those non-residents that wish to claim the UK Personal Allowance (Form R43).
I've never looked at this form R43 before but it's confused me now. Each year I submit a self assessment tax return and end up getting a statement back that I owe no tax as my income is less than the Personal Allowance level (I'm a non resident British citizen). This form appears to ask for all the same info as the self assessment so how is it different than just lodging your tax return? It seems to imply in places that you are claiming a refund or access to the personal allowance, as if you've already been taxed in that year at a different rate and claiming a refund, by why wouldn't that be mopped up in the self assessment tax return anyway?
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