Tax for expats: a guide to easy tax returns

Are you an expat who’s just moved to the UK? Moving country is stressful enough without negotiating new tax systems — so let us help you with the basics of tax returns for expats.

The UK has a progressive tax system, meaning the more you earn, the more you pay in tax. This applies to all UK residents and includes income, property, capital gains and inheritance tax, as well as value-added tax (VAT).

In the UK, the personal tax system is called self-assessment. By completing a self-assessment tax return, you’re reporting your taxable income and gains to HM Revenue and Customs (HMRC), which works out what you owe. Learn more by reading – do I need to register for self-assesment?

Expats – Should You File a UK Tax Return?

Unlike many other countries, you’re not automatically enrolled in the system, and not everybody needs to file. It’s based on your circumstances. For instance, you may need to file a tax return for expats if these factors apply to you:

1. You have foreign income — even if it’s already taxed.
2. You earn over £100,000 per annum.
3. You have a UK rental property.
4. You’re self-employed.
5. You have untaxed UK income — such as bank interest, dividends or capital gains.
6. You’re claiming the remittance basis.

Assuming you’re a non-domicile UK resident (you and your father weren’t born in the UK), then you can choose on which basis you prepare your UK taxes for the first seven tax years in the UK. It’s worth considering preparing your UK taxes on a remittance basis — this means you ignore all your overseas income (unless the UK has the first right to tax, such as pensions, self-employment and overseas employment income) and are no longer subject to UK taxes on it.

If you’re relocating to the UK for work but will be spending a lot of time travelling outside of the UK, you may even be eligible for overseas workday relief. This means you can claim back UK tax paid on all overseas travel for work.

Of course, there are certain tax rules expats will need to comply with, for instance:

1. You must get paid into an offshore bank.
2. Nothing else can be paid into that account — only your salary.
3. You can’t remit any overseas money to the UK.
4. You have to keep a detailed travel log showing where you are each day at midnight and whether it’s for work or personal reasons.

To get more help and advice, download our accounting freebies and tax advice for expats. Get downloads on the basics of the UK tax system, remittance v arising basis and available work reliefs.

What are the deadlines?

The UK tax year starts on 6 April and finishes the following 5 April.

If you need to complete a tax return, you first need to register for self-assessment to get a Unique Taxpayer Reference (UTR). UTRs are 10-digit codes that uniquely identify you or your business, used by HMRC when dealing with your tax — from claiming a tax refund to filing a self-assessment tax return.

You have to be registered by 5 October after the end of the tax year. For example, if you need to complete a tax return for the tax year 6 April 2021 to 5 April 2022, you must register by 5 October 2022.

Once you’re registered, UK tax returns have to be filed by 31 January. So, for the year end 5 April 2022, the filing deadline is 31 January 2023. It’s worth noting that there are no extensions to this deadline — so, it’s best to file your tax return earlier to make sure there’s time to work out and pay your bill.

What happens if you don’t file?

Not all expats have to submit a tax return in the UK (you can check that here).

For those who need to file, failing to do so could result in penalties and additional interest on late payments.

If you pay one day late, you’ll incur an initial fine of £100. Six months late is an automatic penalty of £10 per day, up to a maximum of £900. And a year without submitting your tax return could result in another penalty of £300 or five per cent of the tax that would have been due and payable if the return had been submitted on time.

Although these penalties might sound quite scary, seeking advice from a qualified accountant will put all those worries to rest. UK tax law can be complicated and ambiguous, leaving you scratching your head or going around in circles. At Zebra Accounting, we make sure you’re supported every step of the way.

Talk to a specialist about tax returns for expats

Tax rules change and constantly evolve, which can be a lot to stay on top of. As online accountants with over 20 years’ experience, we keep up to date with all those changes, big and small.

Zebra is a little different from most firms — what you see is what you get. We’re upfront and honest with our advice, making sure you aren’t left in the dark when it comes to your taxes. It’s important to us that we get to know our clients and provide the personal service that our clients love.

The Expat Tax Package

We also know that dealing with tax returns can be time-consuming and stressful. That’s why our expat tax package includes a detailed four-stage process, so you don’t have to worry about a thing. Just answer a short questionnaire to help prepare for the tax return process, and we’ll do the rest. It couldn’t be easier!

Making taxes and compliance simple is what we do. Sometimes, you just need to talk to someone who knows what they’re talking about to make sense of things. Our consultation services provide you with advice and support — whether you’d prefer to have your consultation over email, a 30-minute call or a full 60 minutes on the phone. We can answer those burning questions and provide specific advice.

Are you an expat feeling dazed and confused by the tax return process? Don’t worry. At Zebra Accounting, we take care of every detail. So, get in touch today to find out how we can take the stress out of your UK taxes. And relaaax.