Timing is everything if you are returning to the UK

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16.06.16

Please note that this article is over six months old. While Blevins Franks takes care to make sure that information is accurate on the date of publication, some content may change over time. You should not rely on the accuracy of legislation and tax information in this article; take professional advice for your circumstances.

If you are returning to the UK after being resident overseas, there are things you can do to make your move as seamless and tax-efficient as possible.

If you are returning to the UK after being resident overseas, there are things you can do to make your move as seamless and tax-efficient as possible.

There are many reasons why you may be considering a move back to the UK after living overseas. It could be part of your retirement plan or you could find that circumstances unexpectedly draw you back to the UK.

Whatever your reasons, once you decide you are moving back it is important to give yourself enough time to review and reorganise your financial affairs. This is not only for your own peace of mind, but to make sure the financial implications of your return work in your favour. By seeking professional, personalised advice, you can help make sure your move is as seamless and tax-efficient as possible.

Timing your move

Right now, your finances should be designed to suit your personal circumstances and where you are resident. However, assets and structures that are taxed beneficially for you now may not work so favourably for you in the UK. Conversely, you could find more tax-efficient opportunities in the UK once you become a British resident again.

Where you are resident will also affect the tax implications for any income, such as your pension, as well as selling or moving any of your financial interests. Remember, as soon as you are seen as a UK resident, HM Revenue and Customs will have a right to charge you income and capital gains taxes.

While generally you cannot decide where you are resident for tax purposes, you have some control over the timing of your UK residency. With expert guidance, you can plan to transition at a time that will minimise your tax liabilities in both your current country of residency and the UK.

When will you be seen as a UK resident?

You will not necessarily become a UK resident when you step back on British soil. In some cases, you can be considered a resident before you even leave your current country of residency.

Even if you have been overseas for many years, you may still have links to the UK that can trigger your residency much sooner than you think. This means you could be subject to British taxation before you realise it.

If you still own a UK property, or buy one before moving back, you could become resident before you arrive in Britain. In this case, once you cease to use your foreign property as your main home, you are likely to be seen as a UK resident straight away. This will apply even if you keep your property overseas.

If you are likely to spend time in the UK preparing for your permanent return, be careful that you do not accidentally bring forward the date of your UK tax residence status. Residency can be triggered after only 16 days in the UK if you have been a non-British resident for under three years. If you have been non-resident for longer than this, you could become resident after 46 days of a tax year, or 30 days if staying in a UK property that is considered your main home.
If your residence status is not clear-cut, the tax authorities will look at a combination of the number of days you spend in Britain and the number of ‘ties’ you have to the UK as set by the UK Statutory Residence Test. These include where your family is based, where you are staying and whether you work in the UK. There are specific definitions of each of these ties, so you should seek specialist advice on how they will affect your residency position.

Reaping the rewards of good timing

If you can be flexible around the timing of your move back to Britain, it is a good idea to plan your return date around your tax planning. With the right advice, you can both avoid punitive tax implications and make use of tax-efficient opportunities in the UK.

Before buying a new UK home, for example, you need to understand how tax rules locally and in the UK might restrict or eliminate the availability of main home reliefs. Capital gains tax is also important – it may be more beneficial to sell or buy when resident of one country over the other. Depending on your situation, therefore, you might find it beneficial to either bring forward or delay selling or transferring any assets according to where you are a tax resident.  

Now is a good opportunity to review and improve the tax efficiency of your assets as well as your estate and pension planning. Before you move, it is important to seek guidance from an adviser with in-depth knowledge of both tax regimes to make sure you get the best out of your finances, wherever you are.

Any questions? Ask our financial advisers for help

Tax rates, scope and reliefs may change. Any statements concerning taxation are based upon our understanding of current taxation laws and practices which are subject to change. Tax information has been summarised; an individual is advised to seek personalised advice.

Tax rates, scope and reliefs may change. Any statements concerning taxation are based upon our understanding of current taxation laws and practices which are subject to change. Tax information has been summarised; individuals should seek personalised advice.

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