Tax checklist for moving to the UK

In collaboration with Buzzacott

Whether you’re moving to the UK permanently or just for the foreseeable future, it’s important for you to plan ahead to ensure a smooth transition. This checklist, from Allan Wilkinson at Buzzacott, highlights the key tax areas for you to consider, to make sure you remain compliant and take advantage of tax-saving opportunities. 

When should you take advice?

To get the best possible outcome, for most people, there will be things that they can and should do before they become UK resident. Therefore, it’s essential that you take advice before you relocate to the UK and, more importantly, before you become resident there for tax purposes. The date you become resident, may not be the same as the date you start living in the UK. If you’ve spent any time in the UK in recent years, you may become resident before you fully relocate there and so, if possible, we would suggest you take advice at least six months before your relocation. If your tax affairs are complex, it would be advisable to do so even earlier.

Which visa will you require?

Before you even think about tax, your first port of call is to establish your visa. If you’re not a UK national, you’ll require a visa to study, live or work in the UK. There are multiple routes of entry to the UK and you can browse the different types of visas available on the UK government website. We would always recommend that you speak to an immigration lawyer before you apply for a visa, and we can recommend someone from our trusted network to support you with this. 

In order to work in the UK, you’ll require a UK National Insurance number. Details on how to apply for one can be found on the UK government website.  

Establishing UK residence

There are three stages to determine whether you are resident in the UK in any one given tax year:

• A series of tests to indicate whether you definitely are not UK resident. 
• A series of tests to determine if you definitely are UK resident. 
• If you don’t meet any of the definitive tests, the more complex Sufficient Ties Test looks at your facts and circumstances, in addition to your actual days of presence in the UK.

In the year of arrival (and departure) it may be possible to split the UK tax year into resident and non-resident periods if certain conditions are met. If split year treatment applies, during the non-resident period you are only subject to UK tax in respect of certain types of UK source income.

UK bank account

Once your plans are set, you should look to set up a UK bank account prior to moving to the UK, if possible. This will help you from a UK credit rating perspective and in practical terms, such as receiving salary and paying UK expenses. Having a UK bank account also helps prevent unnecessary remittances and exposure to foreign exchange rate changes.

The UK self assessment tax system

The UK tax year runs from 6 April to 5 April and tax returns are prepared on an individual basis.

Not every UK resident is required to file a UK tax return. If your circumstances are straightforward, with a UK payroll and small UK investment income, it’s unlikely that you’ll need to file one. 

If you or your parents were born outside the UK, it’s possible that you’ll be considered not domiciled in the UK for tax purposes. Domicile essentially means “place of permanent belonging”, so if you have made no definite plans to remain in the UK for the rest of your life, you may be regarded as non-UK domiciled even after you become UK resident. Non-domicile status offers certain tax advantages.

If you’re not UK-domiciled, you can choose the remittance basis of taxation. This generally means that you are only taxed on your UK source income and gains plus any overseas income and gains you bring into the UK. If you have income which doesn’t have tax withheld at source or wish to claim the remittance basis, you will likely have a UK tax filing requirement.

If a UK tax return is required, you must register for UK Self Assessment by 31 October following the end of the tax year in which you arrive. Your first UK Self Assessment tax return will be due the 31 January following the end of the tax year. If your UK tax return shows a liability due, this is payable on the same date the return is due.

National Insurance Contributions (NIC)

Paying UK NIC gives you entitlement to UK state benefits, such as a UK state pension. Generally, everyone over the age of 16 working in the UK is required to pay UK NIC. NICs are collected through UK payroll for employees and through the UK Self-Assessment system for self-employed individuals.

If you’re moving to the UK from certain specified countries or, from a country that has a social security agreement with the UK, then it’s often possible to continue paying into the other country’s social security system for a period of time rather than paying UK NICs.

Download Buzzacott’s 2022/23 UK tax rates and allowances guide for the current UK tax and NIC rates.

UK property

Purchasing a property in the UK is a large commitment that requires careful planning both from a personal and tax perspective. You need to consider your place of work, access to travel networks and proximity of schools if you have children.

Once you’ve established where you want to live, there are tax and other factors that you need to plan for. For example:

• If you own other property anywhere in the world, there will be an additional Stamp Duty Land Tax charge to consider.
• If you’re planning to reside in more than one property, consideration should be given to which property is your principal private residence for Capital Gains Tax purposes.
• How will the property purchase be funded? UK mortgages can be difficult to obtain if you have no UK credit history.
• If purchasing with another person, will you own the property jointly with right of survivorship or as tenants in common?

Many people opt to rent a property in the UK when they first arrive to take the stress out of finding a property to buy in a suitable area before they move to the UK.

UK pension plans

As a non-UK national living in the UK, you’re entitled to save into a UK pension plan. If you work as an employee, you’re likely to be automatically enrolled into an employer pension plan whereby both yourself and your employer make contributions. You can also set up and contribute to a private pension plan such as a UK Self-Invested Personal Pension Plan.

Depending on the level of your income, you can make tax efficient contributions to a UK pension plan of up to £40,000 per UK tax year. 

Non-UK investments and bank accounts

If you have non-UK investment accounts, it’s important to review and understand the tax implications of continuing to hold these investments after you become resident in the UK.  Depending on your circumstances, it may be advisable to sell or restructure certain assets before you become UK resident, so you should take advice about this well in advance of your relocation.

If you’re looking to claim the remittance basis of taxation, you can look at pre-arrival planning with regards to structuring your offshore accounts. This can allow you to take advantage of remitting clean non-UK capital to the UK even after you are resident there. However, you should be aware that there can be down-sides to claiming the remittance basis, so you will need to understand what the implications are before you make this choice. 

Non-UK domiciles are also exempt from UK Inheritance Tax on non-UK assets, in the event of their death. If you have children or others that you want to pass your wealth onto beyond your own lifetime, then there may be some planning that you can do before you become UK resident to take advantage of this exemption.

Other considerations

As well as the tax, there are several other non-tax considerations such as:

• Obtaining and paying for a television licence.
• Arranging utility suppliers for broadband, gas, electric and water.
• Having adequate insurances in place (life, home, car, pet etc.)
• Taking your belongings to the UK.
• Checking whether your driving licence is valid in the UK.
• Moving your pets and their potential quarantine upon arrival.

Speak to an expert

If you’re a foreign national looking to move to the UK, or if you’ve just arrived, Buzzacott can help you understand your tax obligations and plan for the future. Visit Buzzacott’s website for more information.

About the author

Allan Wilkinson, Partner at Buzzacott

wilkinsona@buzzacott.hk | +852 3192 7083 | www.buzzacott.hk