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Returning to UK after not completing full tax year

Returning to UK after not completing full tax year

Old Jul 8th 2009, 6:50 pm
  #16  
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Default Re: Returning to UK after not completing full tax year

Im getting stung for £6k for my time in Dubai. Was told April to April nothing else - full financial year out and you will be fine. They will charge you 20% up to the super tax threshold, you will get your free allowance of however much you are entitled to £6415 or something... ish! that is it, there was no more no less, no asking questions. My fab accountant tried to get as much down as possible but there is no escaping our taxman!!
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Old Jul 8th 2009, 6:53 pm
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Default Re: Returning to UK after not completing full tax year

wow, ok. this is really really helpful.....oh dear, i better stay til april then
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Old Jul 8th 2009, 6:56 pm
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Default Re: Returning to UK after not completing full tax year

I arrived June 08 and left Jan 09. I did contact them and asked if i stayed out until april would this count and i was told no, i was not a non resident until June and i had to be out of the country April to April therefore in effect not returning back to the UK until April 2010.

i hope you can get away with it darl as i have to pay my £6k back by the end of Jan!! Fricken nightmare!
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Old Jul 19th 2009, 6:34 am
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Default Re: Returning to UK after not completing full tax year

Mrshaps,

one more question.

Do they ask for proof of when you stopped working in middle east, ie pay slips etc. Or is proof of your return to UK acceptable, or even starting a new UK job ok?

Im desperate to leave by xmas but i might travel from Xmas to April. I dont wanna spend a few grand travelling then get stung for tax?!?
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Old Jul 19th 2009, 10:18 am
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Default Re: Returning to UK after not completing full tax year

Smiley,

As others have said you definitely need to stay away until April next year. I feel your pain, I moved to Bermuda (another tax free environment) in July 2006, realised was unhappy by December 2006 but had to stay until April 2008 as we would have had an enormous tax bill that we could not afford otherwise.

Once you have completed the initial full tax year, you can come home at any point in the year and they will apply "split year treatment", i.e. you were non resident for six months or whatever, but sadly this won't help you without that first year in.

When I came back, I was not asked for evidence such as pay slips etc. but that does not mean that somebody else will not be. I don't believe you have to be working to be classed as non resident. A non-working spouse would be non resident if they were also overseas.

Regarding your plan to travel for four months, the thing that would worry me (and I do not know the answer to), is if you are not resident in Dubai any longer, will you automatically revert to being resident in UK? Will you still have your residency rights in Dubai? I think you should look into this before you make any plans to go travelling, I would recommend a quick consult with a UK tax accountancy firm.

Otherwise think about staying on for another four months, it might seem like a long time (I could have wept when I heard I would need to stay another 15 months) but it soon passes.
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Old Jul 19th 2009, 10:25 am
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Default Re: Returning to UK after not completing full tax year

some very sound advice, thank you. At the moment it does seem so far away but your prob right it will fly by.....

thanks
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Old Jul 21st 2009, 5:35 am
  #22  
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Default Re: Returning to UK after not completing full tax year

Originally Posted by MrsHaps
Im getting stung for £6k for my time in Dubai. Was told April to April nothing else - full financial year out and you will be fine. They will charge you 20% up to the super tax threshold, you will get your free allowance of however much you are entitled to £6415 or something... ish! that is it, there was no more no less, no asking questions. My fab accountant tried to get as much down as possible but there is no escaping our taxman!!
One way to look at it is being stung...another way to look at it is you have free or virtually free health care, a welfare system safety net, human rights and political and social freedom. You can elect your own leaders, will never have to worry about being blamed if your car is smashed up from behind by an Emirati who can't drive...


N.
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Old Dec 12th 2009, 4:44 am
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Default Re: Returning to UK after not completing full tax year

I am 'bumping' this thread up as I cannot find an answer on 'returning to UK' forum or elsewhere despite doing a fairly comperhensive search.

My situation is similar to the OP. I have been o/seas continously since Sept 2001. I have been in Dubai since Sept 2007. I plan to return to UK in the next couple of years, so am trying to plan ahead!

I am working in education, so would return to UK on the first of July, in whichever year I return. My questions are:

Regarding income:
-Would I have to pay tax on my gratuity if I brought it back into the country?
- Would I have to pay retrospective tax on the income I earned overseas from the April to June?
- I will be selling the car which I have overseas, prior to returning to UK. I would be bringing that money back to UK. Would I have to pay tax on this as it is not work related income?

Other:
I have a house in UK which is my only house. However I bought it in 2003 whilst working overseas. I have never lived in it, and have rented it out.

- How long would I have to live in it after returning to UK before I wouldnt have to pay CGT?
- I understand there is a certain amount (a %age I believe) profit on a house which you are allowed to receive, per year, on a house as described above. Does anybody know what this %age is?

thanks for any advice and information.
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Old Dec 12th 2009, 5:46 am
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Default Re: Returning to UK after not completing full tax year

Originally Posted by Victor Meldrew
I am 'bumping' this thread up as I cannot find an answer on 'returning to UK' forum or elsewhere despite doing a fairly comperhensive search.

My situation is similar to the OP. I have been o/seas continously since Sept 2001. I have been in Dubai since Sept 2007. I plan to return to UK in the next couple of years, so am trying to plan ahead!

I am working in education, so would return to UK on the first of July, in whichever year I return. My questions are:

Regarding income:
-Would I have to pay tax on my gratuity if I brought it back into the country?
- Would I have to pay retrospective tax on the income I earned overseas from the April to June?
- I will be selling the car which I have overseas, prior to returning to UK. I would be bringing that money back to UK. Would I have to pay tax on this as it is not work related income?

Other:
I have a house in UK which is my only house. However I bought it in 2003 whilst working overseas. I have never lived in it, and have rented it out.

- How long would I have to live in it after returning to UK before I wouldnt have to pay CGT?
- I understand there is a certain amount (a %age I believe) profit on a house which you are allowed to receive, per year, on a house as described above. Does anybody know what this %age is?

thanks for any advice and information.
Hi Victor,

Some good news and some bad news. Good first, the monies you bring back into the UK for the reasons you describe are not chargeable to tax. And as you have already completed one full tax year out of the counry, the income you earn between April and June will not be taxable either. In this circumstance, Inland Revenue will apply "split year treatment" which will treat you as being non resident for part of a year.

The bad news is it doesn't matter how long you live in the house, you will never fully avoid CGT. The profit will be prorated and one part will be liable to CGT. So if you own the house for 15 years over all and live in it for the last 5 then two thirds of any profit will be subject to CGT.

There is no % which you are allowed to receive each year. But there is something called letting relief, which is currently £40,000, so the first £40,000 of any profit is exempt. You also get an annual CGT allowance, which is currently about £10,000 but you cannot have previous years, only the year in which you sell.
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Old Dec 12th 2009, 6:06 am
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Default Re: Returning to UK after not completing full tax year

Another very important thing to remember is that when you do return to the UK you are better to bring any money you have saved with you. The revenue does not like returning ex-pats to retain an offshore account - it is not illegal to have one of course but a couple of years ago it was one of the 'rules' for avoiding tax on returning - the so called 'clean break'.

If you do have offshore accounts - property or money - and you return as a UK resident then you will need to declare these and there are some complex tax arrangements.

If you are already in the UK and have offshore accounts in the Channel Islands or IoM then you really should/ must declare to the Revenue because they are going to investigate these. I believe the deadline is March and by now you should have told them you will make a declaration.
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Old Dec 12th 2009, 6:16 am
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Default Re: Returning to UK after not completing full tax year

Originally Posted by Bermudashorts
Hi Victor,

The bad news is it doesn't matter how long you live in the house, you will never fully avoid CGT. The profit will be prorated and one part will be liable to CGT. So if you own the house for 15 years over all and live in it for the last 5 then two thirds of any profit will be subject to CGT.

How about if I sell the house, whilst working overseas, prior to returning to UK. Could I then 'bank' the money/profit ready for my return and buying a new house?

There is no % which you are allowed to receive each year. But there is something called letting relief, which is currently £40,000, so the first £40,000 of any profit is exempt. You also get an annual CGT allowance, which is currently about £10,000 but you cannot have previous years, only the year in which you sell.

So ,if say, I bought the house in 2003 for 215k, sell it in 2012 with a 100 k profit I would pay CGT on 50k. What is the rate of tax for CGT, is it 30%
Thanks for your help
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Old Dec 12th 2009, 6:17 am
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Default Re: Returning to UK after not completing full tax year

Originally Posted by Bijilo123
Another very important thing to remember is that when you do return to the UK you are better to bring any money you have saved with you. The revenue does not like returning ex-pats to retain an offshore account - it is not illegal to have one of course but a couple of years ago it was one of the 'rules' for avoiding tax on returning - the so called 'clean break'.

If you do have offshore accounts - property or money - and you return as a UK resident then you will need to declare these and there are some complex tax arrangements.

If you are already in the UK and have offshore accounts in the Channel Islands or IoM then you really should/ must declare to the Revenue because they are going to investigate these. I believe the deadline is March and by now you should have told them you will make a declaration.
Luckily/unluckily I dont have any offshore accounts.
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Old Dec 12th 2009, 6:23 am
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Default Re: Returning to UK after not completing full tax year

This is the tragedy of the Middle East - for most people the financial side does not work these days.
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Old Dec 12th 2009, 7:03 am
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Default Re: Returning to UK after not completing full tax year

Originally Posted by Victor Meldrew
Thanks for your help
I did wonder about if you sold it before you return to the UK, the trouble is you might have to stay out of the UK for another 5 years afterwards to avoid CGT. I am not 100% sure of that point sorry.

So ,if say, I bought the house in 2003 for 215k, sell it in 2012 with a 100 k profit I would pay CGT on 50k. What is the rate of tax for CGT, is it 30%
Not necessaily CGT on £50k, it would depend on when you started to live in the house. The gain is split proportionally between when you lived in it and when you didn't.

If you had the house for 9 years, lived in the house for the final 3 years and made a £100k profit since you bought in 2003, then two thirds of the gain is liable to CGT.

However assuming you let the house out then you have £40k letting relief. You also have a £10k (appox) CGT allowance.

Chargeable gain = £16.66k tax payable on this @ 18%.

Last edited by Bermudashorts; Dec 12th 2009 at 7:07 am.
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Old Dec 12th 2009, 7:06 am
  #30  
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Default Re: Returning to UK after not completing full tax year

If you are non-res/not ordinarily res for more than 5 years I understand you would be exempt CGT for the house sale if you did it whilst still non-res.

See the following link, in particular Qs 3, 5 and 8:

http://www.hmrc.gov.uk/cnr/faqs_capgains.htm

However, the rules, and their interpretation, change from year to year, and for something like this you need to get professional advice.


Like you VM, I don't have the 'off-shore' to the UK accounts. As a non-res, sure I pay tax on the interest of my UK accounts, but I still end up with more than the usually derisory rates on offer off-shore, let alone their charges. Plus UK based accounts are secured, up to a limit, against collapse to a greater extent than the off-shore accounts.

Off-shore UK accounts are really for UK residents who have some overseas earnings they do not intend to bring into the UK.
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