Non-Resident Tax Return

If you are a non-resident and not living in UK, you may still have to file a tax return with HMRC. Tax rules for UK residents & non-residents are very different, complex and changes are made to these rules from time to time. Determining your tax residency status in UK is one of the most important requirements. It is to be noted that if you are official resident of any other country, you may still be a tax resident in UK

Non-Resident Tax Return with HMRC Even if you are not a UK resident, you have to pay tax on your UK income which includes the following –
  1. Pension
  2. Rental income
  3. Savings interest
  4. Wages

You pay tax on your full income but if you are eligible for personal allowance, you will pay income tax above that amount. You normally don’t pay tax on selling an asset except you are selling a UK residential property.

Establishing Your UK Tax Residence Status

A person’s liability to pay income tax mainly depends upon their residential status. Special rules will apply in case you are not a UK resident. A non-resident should only pay tax on income from a source in UK. You need to declare your residential status to HMRC with the help of statutory residence test.

Reading the information on the internet and making your own decision about your residential status is the biggest mistake made by the non-residents. Establishing your UK tax residency status can be complicated. Therefore, you should take advice from our DNS experts before reading any information on internet & making up your mind to pay your tax bills. Wrong payment of tax bills will lead to penalties & unexpected tax bills.

Factors Affecting Your UK Tax Residence Status

There are certain factors which affect your UK tax residence status and are as follows –
  1. Where is your home and whether you are having a home in UK.
  2. If you are working in UK or abroad
  3. If your family & others are living in UK.
  4. How much time you spent in UK in comparison to time spent in other countries.
  5. Whether you are a resident in UK in previous tax years.

Non-Resident Tax Requirements

It doesn’t mean that if you are not living in UK, you don’t have to complete a tax return. If you are supposed to be a non-UK resident, you may still be required to complete a tax return if you are having a source of income in UK. This is also applicable in the case if you owe no tax.

Situations or circumstances in which a non-resident may require to pay a tax are as follows –
  • If you are a director of a UK company
  • If you are earning income in UK through self-employment.
  • If you do not live in UK but you are doing some or all of your work in UK.
  • If you are receiving profits from a UK partnership firm
  • If you are receiving a rental income from UK.
  • If you are making capital gains from sale or disposal of assets in UK.

You don’t have to declare your income you are receiving from investment (interest or dividends) to HMRC, if it is your UK only income and it is less than £11850.

Any work will be taxable and you needed to complete a tax return if you are working in UK and your tax has not been deducted by your employer through PAYE (Pay as you earn). It is to be noted that you may be taxed on your income in your resident country if it is not in UK. UK has double taxation treaties with some countries which means that tax will only be payable in one country.

Non-Resident Tax Return Penalties

Paying your self-assessment tax return after 31st January will lead to fines & penalties.

The penalties in relation to non-residents are as follows –
  1. If you are 1 day late in submitting your tax return, you will incur a penalty of £100
  2. If you are 3 months late in submitting your tax return, you will incur an automatic penalty of £10 per day maximum up to £900.
  3. If you are 6 months late in submitting your tax return, you will incur a penalty of £300 or 5% of the tax due & payable if return submitted on time (whichever is greater).

In addition to it, you will be required to pay tax geared penalties & interest on any outstanding tax payments.

When Tax Not Due Or Already Deducted

Non-residents usually don’t pay UK tax on –
  1. State pension
  2. Interest from UK government securities.

If you are living abroad but working in UK, your tax will be calculated on the basis of days you worked in UK. Income tax is no longer automatically deducted from interest on savings & investment.

When To Report Your Income To HMRC

You need to report your income to HMRC in the following situations -
  1. If you are working in UK
  2. If you rent out a property in UK
  3. If you have pension outside UK and you remain a UK resident in one of the 5 previous tax years
  4. If you are having any other untaxed income.

Sending Self-Assessment Tax Return

If you are a non-resident, you don’t have to use HMRC online services to tell HMRC about your income.

You can send a self-assessment tax return to HMRC in the following ways –
  1. By post (Fill form SA109)
  2. By using the software
  3. By getting help from DNS experts

Also Read: Calculate Self-assessment Tax Return Penalty

If Overpaid

If you overpaid the tax, you have to apply for a refund. If your total UK income is below the personal allowance of £11850 but your tax is deducted automatically, you have to fill & send Form R43 to HMRC or claim the refund in your self-assessment tax return.

Not British But Living In UK

If you are a foreign national living and having an income in UK and have foreign income or capital gains then you will pay tax on –

  1. UK income
  2. Capital gains on assets in UK
  3. If you bring back foreign income and capital gains to UK.

How DNS Helps?

If you are having any query or doubt regarding non-resident tax return, you can contact our DNS experts to understood whether you have to file a tax return or not. Our DNS expert firstly contacts you for an initial free consultation and provides you with the best advice. The adviser will advise you to establish your residential status and also helps you in completing your tax return. You can call us at 03300886686 or e-mail us at enquiry@dnsaccountants.co.uk

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About the author
Blog Author

Sumit Agarwal
Sumit Agarwal (ACMA ACA India), the Managing partner of dns accountants is a highly respected accountant with expertise in helping owner-managed businesses.

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About the author
Blog Author

Sumit Agarwal
Sumit Agarwal (ACMA ACA India), the Managing partner of dns accountants is a highly respected accountant with expertise in helping owner-managed businesses.


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