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UK Tax Planning For Expats
Moving To Thailand
You’ll need to understand how the UK tax system works upon relocating abroad including the steps you can take to optimise your UK affairs through taking advantage of expat tax rules.
Generally, it is best practice to organize your UK tax affairs in good time, to avoid unnecessary complexities in the UK and Thailand, in the present, future of when you return to the UK.
HOW YOU'RE TAXED IN THE UK
The UK tax system follows a residence based approach meaning that if you are a resident, you will be liable to UK taxation on worldwide incomes & gains whereas if you are non-resident, you will be liable to UK taxation on UK sourced incomes and UK property gains only.
UK SOURCED INCOMES
generated through workdays physically exercised in the UK.
generated through business carried on in the UK.
from schemes established in the UK including state pension.
from assets situated in the UK.
* Note that British citizens are entitled to the personal allowance (0% tax band) irrespective of their resident status and thus, providing that your UK sourced income is no more than the personal allowance, no tax will be payable to HMRC.
CAPITAL GAINS TAX SUMMARY
HOW TO BECOME NON-RESIDENT
Your resident status is determined by the Statutory Resident Test (‘SRT’).
Once your personal circumstances and travel pattern satisfy a test, this will conclude your resident status for the tax year in question.
You’ll be considered non-resident in the UK, if you satisfy any of the following criteria:
if you spend no more than 15 midnights during a tax year.
if you are full time work overseas and minimise physical presence.
if you cut connections to the UK and minimize physical presence in the UK.
* Note that UK law recognises the concept of split year and as such, you can become non-resident within a tax year period upon leaving the UK.
THE UK/THAILAND DTA
You may receive certain incomes tax free as it is exempt from UK taxation under the DTA and exempt from Thai taxation under the revenue code such as UK pension income.
You can also use the DTA to mitigate double taxation whereby both the UK and Thailand seek to tax the same income or gain. To mitigate double taxation, the DTA will require one country to credit tax paid in the other country. For example, for UK homeowners, Thailand are required to credit UK tax paid UK rental income under the DTA.
TEMPORARY NON-RESIDENT
The temporary non-resident rules are anti-avoidance legislation designed to catch taxpayers who leave the UK temporarily to receive incomes or dispose of assets, to avoid a tax charge.
If you are caught by the temporary non-resident rules, the gains made or income received in the non-resident period, will be subject to tax in the year that you return to the UK and resume UK residency.
Broadly, you will be caught by the temporary non-resident rules if you own assets or generate income while you are resident in the UK, you leave the UK and become non-resident, you sell those assets or withdraw those incomes and return to the UK within a set period of time.
Incomes and assets that can fall within the rules are:
TAX OBLIGATIONS IN THE UK
ENSURE A SMOOTH TRANSITION OVERSEAS!
Our UK tax services are designed to take full advantage of your non-resident status while you are a British expatriate living in Thailand and to ensure that your obligations are met with HMRC.
Arrange a free consultation with a UK tax advisor today.
