expat network

Do I Need To File A UK Tax Return As A Retired UK Expat?

I am a UK retired expat and left the UK in 2006 and have been travelling since then. I divide my time between Asia and Europe, no longer than 3 months in any one country at a time.  I have not filled in tax returns, in that time, but am now looking to settle in Asia full time. What, if any, are my tax liabilities, considering I have been constantly travelling?

Trevor Trew of Trew Tax Services responded concerning the UK tax related concerns.

As an individual living overseas since 2006, you may be regarded as non-resident so long as you fulfil the criteria to be regarded as such as set out by H M Revenue and Customs.

Since the 6th April 2013, non-residence has been governed by the Statutory Residence Test. This is first time that the UK has had legislation which determines whether someone is resident or not for UK taxation and it applies to your circumstances to establish your residence position for UK income and capital gains tax.

Your residence position is important as you are taxed differently on your UK and overseas sources of income and capital gains depending on whether you are resident or not under the test. The test needs to be considered for everyone’s circumstances independently, so each individual’s residence position is considered separately.

The test has three separate tests and within each of the three tests there are different criteria which need to be looked at to determine your residence status for the UK tax year in question. The three tests need to be considered in order each and every year. As the tests run consecutively, if you happen to meet any of the criteria within the first test it is not necessary to look beyond this to the two other tests. The three tests are Part A – Automatic Overseas Test. Part B – Automatic UK Test. Part C – Sufficient Ties Test.

The basic rule is that you will be resident in the UK for the entire tax year if you do not meet any of the Automatic Overseas Test and you meet the conditions set out either by the Automatic UK Test or Sufficient Ties Test.

Once you are sure of your residence position then it is possible to determine liability to tax. Someone who is resident will be taxable in the UK on the basis of worldwide income and capital gains arising. A non-resident however is subject to UK tax solely in respect of UK arising income and since 6th April 2015 capital gains from the sale of UK residential property.

This is a potentially complicated query to which only a general reply is possible. If you would like a personalised response some specific information is required which would determine your residence status, liability to UK tax and whether you need to file an annual self-assessment.