My son, who was born, has lived and worked, all his life in England, has decided to live and work abroad for a while. He finishes his job in UK July and plans to move to Spain in August.
He plans to rent out his UK property while he is abroad. I believe that he will be taxed in Spain on his Spanish income.
My questions are;
While he is working abroad how often is he allowed to return to the UK?
Will he still have a personal allowance in the UK?
Presumably he will have to pay tax on any net profit from his rental income.
Even though not resident in the UK he would still be considered ordinarily resident for tax purposes.
He would become non resident from the start of the tax year after leaving the UK so he would be resident up until next April and due to UK taxes on worldwide income but as tax would be paid in Spain that can be set off against his UK liability (double taxation relief)
His UK income would be taxed in the UK.
After next April (new tax year) he would no longer be considered resident in the UK so his overseas income would be exempt from UK tax as he would lose his residence status (but not his ordinarily resident status).
Hope that helps for starters.
kind regards,
Shaun.
__________________
Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
Sorry, I thought that we covered that one on the phone.
I should note here that my experience of this is based on UK resident citizens on secondment accross the world for periods of less than one year so I have no practical experience of people losing residency status and am happy for the following to be corrected by others if I state anything that is incorrect. (I can just sense people like Michelle, Robert, Truman and Mark waiting like a tag team on the side lines here, lol)
UK property income (as with all UK income) is charged in the UK.
Worldwide income is charged in the UK whilst UK resident (as well as being charged at local taxation rates in the country where the work is performed).
One is deemed resident in the UK unless not in the UK for a full tax year but you will have double taxation relief available to you for any tax born abroad (evidence of such is required).
Whilst your son is resident or ordinarily resident he will have a UK personal allowance but if he loses his residency status he also loses his annual allowance.
Hope that helps,
kind regards,
Shaun.
__________________
Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
Hello Shaun, Sorry if I caused confusion, at least it's something I'm good at! Just reading Melville and on page 515 it states;
'Individuals who are not resident in the UK are liable to pay income tax on their UK income only' and that; 'the property income of non-residents is usually payable after deduction of basic rate income tax by the letting agent or tenant'.
I think that what confuses many though is what constitutes residency.
The lay person probably thinks that if they are not physically in the UK then they are not resident but as you will have noticed from Melville the actual rules are somewhat more complicated than that.
One thing that you will quickly find with any book is that no matter what your question that books (and HMRC website) never answers it in exactly the way that will leave you completely clear in your understanding... And if they do then obviously you must have missed something!
kind regards,
Shaun.
__________________
Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
Hello Shaun, =========================================================================================== 'One thing that you will quickly find with any book is that no matter what your question that books (and HMRC website) never answers it in exactly the way that will leave you completely clear in your understanding... And if they do then obviously you must have missed something!' =========================================================================================== If your comments were not true........ Regards, Mike
