February 5, 2024

Our Guide To UK Tax For Non-Residents


According to the tax legislation in the UK, an individual's non-resident tax classification is established through the Statutory Residence Test as outlined in FA 2013. This assessment takes into account the duration of physical presence in the UK, along with various other factors such as the number of connections or 'ties' to the UK.

Just because you are not resident in the UK under the test, this does not mean that you will not be subject to UK taxes for non-residents.

A review of the rules

UK tax laws mean you may still be able to spend a number of days in the UK without triggering UK residence.

ASWATAX can conduct an assessment of the Statutory Residence Test tailored to your individual circumstances. This analysis aims to determine the permissible number of days of presence before you are considered a resident in the UK. We are extremely well-versed in this area.

Split Year Treatment

Individuals arriving in or departing from the UK during a tax year might be eligible for split-year treatment.

These complex UK non-resident tax rules are beneficial to those who would otherwise be resident for the complete tax year and allows the tax year to be split in two periods - a residency element and non-residency.

Pre-arrival planning

Non-resident individuals that are coming to the UK should undertake careful planning and arrange their affairs appropriately in a tax efficient manner.

ASWATAX can assist with UK tax for foreigners for those individuals preparing to come and live in the UK. We can also assist overseas investors who own UK land and property.

Capital Gains Tax

UK capital gains tax for non-residents is more complex. Generally speaking, non-residents are not
chargeable to UK capital gains tax but there are a number of exemptions to this rule, one of which is the temporary non-residency rules.

Individuals who lived in the UK for four of the last seven years prior to their departure will be subject to UK capital gains tax if the individual returns to the UK within five tax years. Any assets disposed of during their non-resident period will be subject to UK capital gains tax upon their return if the asset was held at the time of departure from the UK.

Disposals of UK property

UK property is also subject to UK capital gains tax regardless of your residency position. Sales must be notified to HMRC within 60 days of the transaction.

Penalties and interest will be levied for late payment and submission so if you require assistance, please do get in touch and we will be able to assist with your filing obligations.

Inheritance tax

UK inheritance tax is applicable if an individual is domiciled (or deemed domiciled) in the UK.

There are a number of inheritance tax planning opportunities for non-residents to consider to reduce the UK inheritance tax exposure. Our strategies are well-versed and undertaken for clients previously.

Double taxation

UK and overseas tax could become due where income arises in one jurisdiction and the individual is resident in another, or where an individual is a dual resident. If there is a double tax treaty in place between the two countries, this can be used to prevent double taxation from occurring.

ASWATAX possesses significant expertise in providing advice on UK taxes for non-residents, particularly in the application of double tax treaties that the UK has with various jurisdictions.

Key points for consideration

Generally, individuals who are not resident in the UK will only be subject to tax on their UK sources of income (and possibly capital gains). If you are a British citizen (or a citizen of another EEA county) you will still be entitled to a tax-free personal allowance.

Individuals may be able to use the disregarded income rules which restrict the UK tax liability to the amount of UK tax that is withheld at source.

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