Making the move back to the UK after spending time living abroad is not nearly as easy as one would think. There are a number of reasons why people decide to return ‘home’, most commonly, homesickness, new position and missing family members.
Your decision to move home has likely took months to reach and moving home after spending an extended period of time living and working abroad can give way to a number of challenges, both emotional and difficult never mind the change of climate and way of life.
The process of repatriating can become a stressful experience. Think of it as being similar to when you started your expat adventure, just without the hassle spending hours in a bank, opening up a new account in a foreign country!
When considering repatriation, one must consider whether they are still a UK Resident or an Overseas Resident.
This list of Criteria is helpful in determining which category you fit in. This should be step one when considering moving back to the UK.
You are still considered a UK resident if you;
- Present in the UK for 183 days or more in a tax year; or
- There is at least one period of 91 consecutive days, at least 30 days of which fall in the tax year, when:
- you have a home in the UK in which you spend a sufficient amount of time (typically 30 days), and either you:
- have no overseas home, or
- have an overseas home in which you spend no more than a permitted amount of time (typically 30 days)
- Work full time (typically 35 hours per week) in the UK, as assessed over a period of 365 days with no significant break (typically 31 days of less than 3 hours work) (also consider relevant jobs)or
- The 30-day presence rules operate on each home separately and independently
You are now considered an overseas resident if you;
- Resident in the UK in all of the previous three tax years and present in the UK for fewer than 16 days in the current tax year; or
- Not resident in the UK in all of the previous three tax years and present in the UK for fewer than 46 days in the current tax year; or
- Work “full time overseas” (typically 35 hours), in the year of assessment and there are no significant breaks from overseas work (typically 31 days of less than 3 hours work), the number of days on which more than 3 hours are worked in the UK is less than 31 and the number of days spent in the UK is less than 91
Now it’s time to acknowledge what has changed since you left
A list of changes would include;
- Changes to State Pension
- Changes in personal tax allowances
- Changes to lifetime allowance
- Changes to inheritance tax
- The closing of capital gain loopholes
Regarding state pension,
After April 2017, people will have to work longer, needing to make 35 years’ worth of National Insurance (NI) contributions, rather than the current 30, to qualify for the full state pension.
Whether or not you will be awarded the UK State Pension is usually based on the UK qualifying years you have worked. You can however accrue qualifying years in the European Economic Area, Switzerland, or certain bilateral countries that have a social security agreement with the UK. We can assist by sending you a quick and easy 5 step guide to checking your NI contributions, just email me for details.
Regarding changes to personal tax allowance,
The amount of money you are allowed to earn before income tax becomes payable has increased to £11,000, up from £10,600. From 6th April 2017 it will rise again to £11,500.
Those who fall into the 40% tax rate bracket can now earn £43,000 a year, up slightly from £42,385 in 2015/16, before having to pay the higher-rate of income tax. This is set to rise further to £45,000 in April 2017 with the Government stating its commitment to raising it to £50,000 by 2020.
Regarding changes to lifetime allowance,
On the 6th April 2016 the standard pensions Lifetime Allowance (LTA) was reduced again, this time from £1.25 million to £1 million. Having peaked at £1.8m in 2010/11 anybody with an estimated pension portfolio approaching £700,000 or a projected retirement income of £35,000, must review their retirement plans now.
Those who do nothing risk being taxed at a rate of 55% for any excess (amount above the lifetime allowance) taken as a lump sum, or 25% for any excess taken as income (in addition to your marginal UK income tax rate). We can assist with a free pension review, please email me for more details.
Regarding changes to inheritance tax,
The idea of working your whole life and then having to pass a large slice over to the state can leave a bitter taste in many people’s mouths. However, with careful planning there are ways to minimise or even eradicate any such liability and ensure that your life’s wealth goes to the people you want it to.
Unfortunately, it is all too common to see forced property sales and huge tax payments simply because people did not seek proper advice at the right time. There are some very simple steps to protecting your wealth and they could end up saving you and your family a fortune.
Regarding closing of Capital Gains Tax loopholes,
As of April 6 2015, all non-UK residents must pay CGT when selling UK residential property of any value. If you currently own a UK property, be it for residential or investment purposes, it is important that you are up to speed with the new Capital Gains Tax Rules introduced in 2015. When an asset, such as a house is sold or disposed of, Capital Gains Tax (CGT) is paid on any realised profits.
The total gain is calculated by subtracting the sale value from the property’s when the rule change came into effect. If you haven’t already, you should consider obtaining a valuation of your property, even if you don’t intend on selling it in the near future.
How you are impacted by UK CGT can differ based on your residency status. The tax rules in your current jurisdiction might make it advantageous to dispose of your assets before returning to the UK.
If you have any questions or queries on ANYTHING above I would be more than happy to advise and speak to you on a one to one basis, either email or call me direct.
All the best and have a great day
+60 3 2026 0286