One of the burdens of being an expat is managing to keep the tax deadlines of two countries straight. For expats living in the UK, the final tax deadline is right around the corner. Avoid last-minute tax pressure and find out what you need to make it to the finish line.
The UK Tax Deadline
The UK has two different deadlines for taxes. For those filing paper returns, the deadline was back in October. If you missed this deadline, you can still make the final January 31st deadline for online submissions. However, there are no extensions, so meeting this deadline is crucial if you want to avoid late filing penalties!
Not only is the tax deadline different, but the tax year is, too. In the UK, the tax year runs from April 6-April 5. You’ll need to submit your requested financial documents based on this period. And, what will you be submitting, exactly? The UK requires a Self-Assessment – something comparable to the Federal Tax Return you’re quite familiar with filing. You’ll send this off to HMRC, otherwise known as Her Majesty’s Revenue and Customs.
The threshold for needing to file is if your income was £100,000 or more. If you earned less than that during the UK tax year, in most cases you won’t need to file, as your requirement will have been met by the PAYE (pay as you earn) system. This includes both salary and benefits received. But, there are some exceptions, such as the following:
- Income from investments that exceeds £10,000
- Self-employment income greater than £1,000
- If you’ve received a letter from the HMRC requesting that you file
- You are the director of a company, unless the company is a non-profit and you receive no salary or benefits for your work
- Your or your partner’s income exceeded £50,000, and one of you claimed the Child Benefit
- Income from abroad that you had to pay tax on
If you’re still unsure, this handy tool can help.
Filing a Self-Assessment
Before you get started filing, you’ll need a UTR (Unique Taxpayer Reference), which is an identification number specifically for tax-filing purposes. If you don’t already have one, you can obtain one here. Next order of business is locating information on all your income and gains from the year. In addition to income tax, you may be liable for UK tax on non-cash compensation, capital gains, or your estate, depending on your specific financial situation.
You’ll need to find out whether or not you’re considered a resident for tax purposes because this determines whether or not you’ll be subject to tax on your foreign-sourced income. If you’re not considered a resident, you’ll only need to pay tax on income you’ve generated in the UK. If you are a resident, you may need to pay tax on all of your income, regardless of source.
You will fall into one of three categories: non-resident, resident and ordinarily resident, or resident and not-ordinarily resident. Basic residency is determined by your long-term intentions and how much time you spent in the UK. If you expect to stay more than two years when you arrive in the UK, you are considered a resident from your first day. If you do not intend to stay more than two years, then you are considered a resident only if you spend 183+ days in the UK. However, if you spent 91 or more days per year for the last four years in the UK, you will be considered a resident as well.
If you are a resident, find out if you are ordinarily or not ordinarily a resident. If you plan to spend three or more years in the UK (which is proven by property purchase or rental agreements), then you will be considered a resident ordinarily. Not ordinarily resident is a category for those who plan to spend between two and three years in the UK.
Want More Info on Taxes for Expats Living in the UK?
Download our handy, thorough, and free guide for UK expat taxes. Or, have one of our UK specialists handle your taxes, so that you know your taxes are correct, on time, and that you’re not spending more than necessary.