A question we are asked regularly by UK expats, or by expats who are returning to the UK is: “Do I need to lodge a UK tax return?”
HM Revenue & Customs – or HMRC – issues tax returns to individuals who are already actively in the UK Self Assessment tax system in April each year. For those who have submitted tax returns in hard copy (paper) format in the previous year this will be another paper form, while for those who have lodged electronically a Notice to File will be issued.
Once HMRC has issued a tax return or a Notice to File to a taxpayer the return must be lodged by the due date if a late filing penalty is to be avoided.
Note: The due date for lodging a UK tax return is usually:
- 31st of October following the end of the tax year if submitting a hard copy (ie paper) tax return
- 31st of January following the end of the tax year if submitting the tax return electronically
Thus, the due date for lodging a 2015 personal tax return with HMRC electronically is the 31st of January, 2016.
It is possible for HMRC to agree to withdraw the request a Self Assessment tax return if all income is being taxed under PAYE, or if the taxpayer has departed the UK to live overseas – ie became non tax resident in the UK – before the start of the tax year under review and has no ongoing source of income that remains subject to tax in the UK even though non resident.
The most commonly encountered UK source of income that remains subject to tax in the UK when not UK resident is rental income from a property located in the UK.
So what happens if you are not in the Self Assessment regime?
Most taxpayers in the UK are not required to lodge a tax return because their income is taxed through the UK Pay As You Earn (PAYE) system.
However, individuals with the following circumstances should take active steps to enrol in the UK’s Self Assessment regime, and to lodge a UK tax return for the previous UK tax year:
- You were self-employed
- You received £2,500 or more in the form of untaxed income after allowable deductions, such as from renting out a property, or in the form of dividends or interest from savings and investments
- You received dividends or interest of £10,000 or more from savings or investment income
- You made a capital gain from selling investments such as shares, a second home or other chargeable assets of an amount in excess of the Capital Gains Tax Annual Exemption
- You were a company director – unless it was for a non-profit organisation (eg a charity) and you didn’t get any pay or benefits, like a company car
- Your income (or your partner’s income) was more than £50,000, and one of you claimed Child Benefit
- You received income from abroad on which you need to pay UK tax (eg from a rental property located outside the UK)
- You lived abroad and had a UK income
- You received dividends from shares and you are paying income tax at the higher or additional rate
- Your total income was over £100,000
- You were a trustee of a trust, or of a registered pension scheme
HM Revenue has an online tool to check whether there is a need to enrol in the Self Assessment system and to lodge a UK tax return here.
The most commonly encountered circumstance where an expat is required to complete a UK tax return is where a UK located property has been retained and is being let. For such individuals the tax return will comprise the Property and Residence supplements.
It should be noted though that the Residence supplement cannot be lodged through the HMRC website – options include submitting a paper return by the 31st of October following the end of the tax year, buying commercial software that allows for the preparation and e-submission of the supplement, or instructing a firm of tax accountants.
If you are uncertain of whether you have to complete a UK tax return, or have a need to enrol in the UK Self Assessment system we invite you to complete the enquiry form on this webpage. We will be pleased to discuss your tax situation and whether there is a need to submit a UK tax return.