There is also a trap for people who successfully manage to cease UK tax residence for a tax year, but due to unforeseen reasons have to move back to the UK within five years of departure. The trap applies to a temporary period of absence from the UK where an individual receives certain sources of income or realises capital gains on assets they owned before leaving the UK.
Ordinarily there might have been no UK tax to pay while non-UK resident, but the taxman could retrospectively collect tax on the funds received during the period of absence. This can be disastrous for the unaware who may have spent all the funds before discovering they have a HMRC tax bill.
Continuing liability to UK tax
Even where someone ceases to be UK tax resident this does not necessarily mean they have escaped the taxman.
For example, if the person owns a family home here and collects rental income from it after leaving the UK, HMRC could still seek to collect taxes in respect of it – and the owner will need to fileUK tax returns to declare such income.
In some cases, there might be a mandatory withholding of tax owed from gross rental income, which could create cash flow problems for the ex-pat owner.
If the property owner sells the family home after ceasing to be a UK tax resident, the UK tax situation must be considered.
If the person had remained a UK tax resident and had lived in the family home, which has been their only or main residence throughout the period of ownership, no liability to tax would usually arise on any profit realised from the sale.
The position could be vastly different if the property owner left the UK some years before selling the family home. Prior to 6 April 2015, there was generally no liability to UK tax if an individual sold their family home after becoming a long-term non-UK resident.
However, since that date there has been a liability to tax when non-UK residents dispose of a UK residential property. The rules are complicated, though, and require consideration of all the facts to determine whether a UK tax charge arises for an individual.
Even in cases where there is no UK tax charge, there is an obligation to file returns with HMRC – usually within 30 days of completion of sale of the residential property. If there is a tax charge, then in many circumstances this must also be paid within 30 days by the seller.
Employment considerations
