If you think you will probably return to the UK at some point, it is worth getting a sense of the tax and financial issues involved. In the midst of packing, address changes, leaving parties and general arrangements, it is easy to overlook sensible financial planning and there is potentially a lot of tax to be saved.
For example, you may be required to transition over a period of time into a new UK based role. If you are spending time in your UK office you may unknowingly qualify for UK residency before you actually move. In addition, moving partway through a tax year may impact tax payable on any investments you hold and plan to sell here.
A good tax adviser will be invaluable to help you navigate some potentially tricky tax matters. However, here are some things you should know and consider before you seek advice and make choices.
- If possible, review your situation in the tax year prior to leaving and take some actions at that time.
- Make sure you are up to date with your filing obligations to HMRC.
- Review all your financial interests including property, accounts, life assurances, pensions and investments.
- Identify the tax characteristics of each asset with a view to determining which should be kept, and which should be sold for maximum tax efficiency.
- Recently the HMRC has become strict on its definition of what qualifies as resident and non-resident. The Statutory Residence Test lays out the qualifications. Be sure to check how that applies to you on the HMRC website and maintain a record of your “midnights” in the UK in the tax year prior and for ideally 5 years before that.
Getting the most favourable tax assessment on your total wealth may be a minefield. Sometimes the solutions are more complex but certainly worth a thought.
- Special care should be given to your property assets, as particular Capital Gains Tax complications can arise, for which specialist advice is usually needed.
- Particular tax efficiencies can arise through the choice of vehicle through which you invest. Offshore investment bonds, foreign pension trusts, certain UK vehicles and trusts can all play an important part in delivering a higher net return after tax.
- If your spouse is not British, there are particular tax planning considerations you can take into account through the use of offshore assets and holding structures.
Typically, a more diversified portfolio will give you greater tax breaks. ISAs, Income Tax allowances and Capital Gains Tax (CGT) allowances can all be used to minimise your annual tax bill.
In the fast changing world today, you may be required to move swiftly. If you have planned well ahead of time or at a minimum in the tax year before your return, the tax implications of your move back can be managed and controlled.
The information in this article aims to provide information. However, this is not intended to form professional advice nor should it be relied upon as such and before taking any particular action, specific and personal advice should be obtained. All levels and basis of, and relief from taxation illustrated here are subject to change. The Fry Group (Singapore) Private Limited. Authorised to act as a financial adviser by the Monetary Authority of Singapore (MAS). License number FA100057-1.