If you’re temporarily non-resident in the UK, it means you’ve left the country but plan to return within five full tax years. While you’re non-resident, you’re not subject to UK tax on your worldwide income, but there are important tax considerations upon your return.
Key Tax Implications
- Capital Gains Tax (CGT):
- If you dispose of assets (e.g., property, shares) during your time as non-resident, the gains might be subject to UK tax when you return.
- For example, if you sell property or shares while abroad, CGT may apply upon your return, unless you qualify for exemptions or reliefs.
- Income Tax:
- Any income from UK sources (e.g., rental income) continues to be taxed while you’re abroad.
- If you’re a director or shareholder, income or dividends might still be taxable, even if youโre not physically in the UK.
- Inheritance Tax:
- During your time abroad, the UK inheritance tax rules may apply to assets you still own in the UK. However, if you return after five years, your worldwide estate could become subject to UK inheritance tax again.
- Remittance Basis:
- If youโre a non-domiciled UK resident, you may choose the remittance basis, which means you’re only taxed on UK income and income brought back into the UK.
CGT Upon Return
One of the most significant implications of temporary non-residence is the potential for capital gains to be taxed when you return. If you’ve disposed of assets during your time outside the UK, the UK tax authority (HMRC) may assess those gains if you re-establish residence. This could include property or shares, so it’s important to plan accordingly.
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