Must know UK Tax Tips for Expats moving to the UK

UK Tax Tips for Expats moving to the UK

Even residents for tax purposes find the UK tax rules complicated. How much more to expats like you who want to move to the UK. Because your tax treatment could be different because of your non-domiciled status.

Being non-domiciled in the UK can have a potential impact on your UK tax affairs. This is why you should seek advice from tax experts before you relocate to the UK.

There is a wide range of tax and national insurance concerns you need to know beforehand. There’s the PAYE system that you’ll likely use if you work for a UK employer upon your move. There’s also the issue of your UK tax return which is calculated differently if you have both local and foreign incomes.  

In this article, you will learn tips on how to reduce your tax bill as an expat in the UK.

Where to Save on UK Tax

1. Overseas Work Days Relief 

If you’re a non-UK domicile working in the UK, you may be able to legally avoid paying tax on your foreign income if you do not remit the earnings to the UK. Just arrange to receive your foreign earnings to a “compliant” offshore bank account.

2. Tax-Free Pre-UK “Capital” Remittance

While resident in the UK, you can avoid paying tax on non-UK income and gains if you file UK tax return on a remittance basis. Prior to becoming a UK resident, you can “ring-fence” earnings/income/gains so you can bring with you to the UK “pre-UK” money on a tax-free basis.

3. Temporary Work Place Relief

UK housing, utility, and subsistence costs are tax deductible expenses if you are assigned to the UK by an overseas employer for a temporary period of up to 2 years.

4. Tax-Free International Travel Costs

International flights can be quite expensive but you may be able to claim these costs as tax-free.

5. Tax-Free Relocation Costs

If you’re relocating to the UK for work, you may be eligible for certain employer reimbursed costs that will allow up to £8,000 of relocation expenses to be paid tax-free.

6. Home Leave Travel Costs

If it is your first time working on an assignment to the UK, the cost of traveling to visit your home country, which is reimbursed by your employer, will be taxed-free for the first five years.

7. International Tax Treaty Relief

Countries with double taxation treaties with the UK will provide tax-paying expats with exemptions or relief for any foreign taxes paid. They can also claim a credit for some of the foreign taxes that is also taxable in the UK.

8. UK Tax Relief on Pension Contributions

You may be able to obtain UK tax relief or avoid paying taxes on employers’ contributions whether you pay a recognised overseas or registered UK pension plan.

9. Tax-Free Pension Lump Sum

The lump sum you will receive from a foreign pension plan may be tax-free if you participated in that plan as a non-resident of the UK before April 2017.

10. Lower Social Security Contribution Rates

If the UK network of regulations/agreement apply, you can opt to pay for the social security contribution in your home country if the rate is lower compared to the UK National Insurance.

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