Emigrating and Tax

With tax rates on the rise and the coldest winter in years still a vivid memory, it may be a tempting prospect to leave Britain behind and settle somewhere in the sun.

One of the drawbacks with this approach is that it is, in practice, difficult to sever one’s connection with the UK for tax purposes. There are several things you must do in order to become non-resident for tax purposes with respect to your income. For example:

1. If you absent yourself from the UK for the whole of a tax year, you will be non-resident for Income Tax purposes for that year if you have gone abroad to work;
2. If you have not gone abroad to work, then the key principle for establishing non-UK tax residence is the demonstration that you have formed a permanent intention to reside abroad. This is, in practice, difficult to do for Income Tax purposes and very difficult indeed (unless your father was of foreign domicile) for Inheritance Tax purposes.

Foreign residence status can easily be lost, for example by too-frequent or too-lengthy visits to the UK or by maintaining a house or social ties here.

HM Revenue and Customs (HMRC) have issued guidance (HMRC 6) on residence, which is useful reading for anyone contemplating living or working abroad.

For further guidance on HMRC's approach to tax residence, click here.