If you are returning to live or work in the UK after a period abroad, you will need to tell HM Revenue & Customs (HMRC) and sort out your tax affairs both in the UK and the country you are leaving. Changes to your residence status may affect the tax you pay.
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From 6 April 2013 the rules that determine if someone is resident in the UK for tax purposes have been put on a statutory basis. These rules are known as the Statutory Residence Test (SRT). For the majority of people whether or not they are resident for tax purposes is quite straightforward under the test and their position will not change. For those with complex circumstances the SRT will provide more certainty about their residence status.
To help you understand your tax residence status HMRC have launched an on-line tax residence indicator. This residence indicator will give you an indication of your tax residence status after answering a few straightforward questions such as how many days you spent in the UK, where you have a home and if you have family ties.
Find out more about the SRT and changes to Overseas Workday Relief by following the links below:
The RDR1 is a guide for residents and non-residents on the residence, domicile and remittance basis rules for tax years 2012 to 2013 onwards. It replaces the booklet HMRC6.
The HMRC6 booklet should be used as a guide for residents or non-residents for information on rules affecting your tax liability in the UK up to the end of tax year 2012 to 2013 only.
If you return to the UK to work after a period of absence, you'll have to fill in certain forms to start paying tax again. Which forms you need to complete will depend on the type of work you are doing. If you're not working you don't need to complete a specific form, but you do still need to contact HMRC.
If you are going to work for an employer in the UK, they will give you the forms you need to complete so that they can deduct tax from your earnings under Pay As You Earn (PAYE). In this circumstance, you don't need to contact HMRC.
If you are going to work for yourself you will need to register as self-employed with HMRC so that you pay the right tax and National Insurance.
If you have returned to the UK to live but do not intend to work here, you should tell HMRC if you have any UK or foreign income and/or capital gains. You may need to start paying UK tax on these. HMRC will advise you of any action you need to take.
If you return to the UK to live or work, you will normally become resident in the UK. This means you:
If you were a UK resident and moved abroad for less than 5 full tax years before becoming resident in the UK again, you will have been 'temporarily non-resident' for the period you were away. For more information about temporary non-residents and paying tax on the remittance basis follow the link below.
If you were out of the country for less than a full tax year (6 April to 5 April) you will have remained UK resident while you were abroad. This means you will have to pay tax on your UK income and gains, and you may also have to pay UK tax on your foreign income and gains for the whole tax year. Follow the link below to find out how residence affects your tax.
You may be entitled to tax relief under a double taxation agreement.
If you become UK resident part way through a tax year and your circumstances meet specific criteria the tax year will be split into two parts:
Further details regarding split year treatment can be found at Section 5 of the Guidance Note below.
You will need to check with the tax authority in the country you are leaving about any tax you may owe or tax you may be able to reclaim before you leave.
If you wish to receive a full UK State Pension when you retire it is important that you keep your National Insurance contributions up to date so that you have enough full years to qualify. If you've been abroad you may not have a full record, but you may be able to top up your National Insurance contributions.
If you transferred your UK pension to an approved overseas pension scheme (known as a Qualifying Recognised Overseas Pension Scheme) while abroad, you might want to transfer it back to a UK pension scheme. Follow the link below to find out more.