Pre-arrival Tax Planning

Even if you are not a UK tax resident, it's crucial to understand that any rental income generated from your UK property is still subject to UK tax obligations. HMRC will typically tax this income in the usual manner, regardless of your residency status.

However, there is a beneficial option available known as the Non-Resident Landlord Scheme. While this scheme does not provide tax-free income from your property, it does offer the advantage of preventing tax deductions at the source. This means that you would receive the full rental income without any tax being deducted before it is paid to you.

To ensure compliance with UK tax regulations and explore potential tax benefits, it is recommended to consult with a qualified tax advisor. They can provide detailed information about the Non-Resident Landlord Scheme and assist you in making informed decisions regarding your rental income and tax liabilities.

There are two important rules to keep in mind regarding UK tax liability:

1. Non-residents of the UK are still liable for UK tax if their income is derived from sources within the UK. This means that even if you are not a UK resident, you may be subject to UK tax on income earned within the UK.

2. If you become a UK tax resident, your worldwide income, which includes interests, dividends and investment income may become taxable in the UK. This means that not only the income generated within the UK, but also income from worldwide may be subject to UK tax unless certain conditions are met under remittance basis.
   
   

It is essential to understand these rules and assess your tax status properly to ensure compliance with UK tax regulations.

UK properties rental income

UK tax resident

To determine your UK tax residency status, the following criteria are considered:

1. If you spend 183 days or more in the UK tax year, which runs from April 6 to April 5, you will be deemed a UK tax resident.

2. If your only home is located in the UK, you will be considered a UK tax resident if you have owned, rented, or lived in the property for at least 91 days and spent at least 30 days there in the tax year.
   
   

If you do not meet the non-resident or automatic resident criteria, your residency status will be determined by a combination of the number of days you have spent in the UK and the presence of "sufficient ties" to the country. These ties include factors such as family, accommodation, work, and more. Determining residency based on these ties can be complex, and further details can be found on the HMRC website.

Remittance basis

If you are a resident but not domiciled in the UK, you may have the option to choose the remittance basis of taxation for your foreign income and gains. Under this basis, you are liable to pay UK tax on your UK income and gains in the tax year when they are generated. However, you only need to pay UK tax on your foreign income and gains when they are brought or "remitted" to the UK.

The remittance basis can be beneficial in preventing double taxation, as it allows you to avoid paying tax on foreign income and gains that remain outside the UK. By choosing this basis, you have the flexibility to bring only the necessary funds to the UK and keep the rest abroad without incurring UK tax on those amounts.

It's important to note that there are specific rules and conditions associated with the remittance basis, and it's advisable to seek professional advice to understand the implications and determine if this option is suitable for your circumstances.

Inheritance Tax

In the UK, inheritance tax can be significant, but it is applicable only above a certain threshold. If an estate's value exceeds £325,000 and is left to an individual, a tax rate of 40% may apply to the amount above that threshold.

It is crucial to note that planning ahead before immigrating to the UK is important when considering inheritance tax. Understanding the implications and potential tax liabilities associated with your estate is essential. By engaging in proactive estate planning, you can explore various strategies to minimise the impact of inheritance tax on your estate.

It is highly recommended to seek professional advice from a qualified tax advisor or estate planner before making any decisions. They can guide you through the complexities of inheritance tax laws, help you plan effectively, and ensure compliance with relevant regulations. Taking proactive steps in advance can help you protect your assets and minimize the potential inheritance tax burden on your estate.

Tax Residency of Companies (e.g. Hong Kong Companies)

Unlike individuals, the tax residency of a company, according to UK tax regulations, depends on central management and control. In general, a company is considered tax resident in the UK if its central management and control is exercised within the country. There are certain aspects to determine the tax residency status of the company.

If a director of a Hong Kong registered company moves to the UK, there is a possibility that the company may become subject to UK Corporation Tax. The tax implications will depend on the circumstances and the extent to which the central management and control of the company is exercised in the UK. If the company's key decision-making processes and strategic direction are shifted to the UK, it may be regarded as tax resident in the UK and therefore liable to UK Corporation Tax on its worldwide profits. It is important for directors and businesses to consider the potential tax consequences and seek professional advice to ensure compliance with UK tax regulations and properly manage the tax affairs of the company.

Our Pre-arrival Tax Planning service is designed to assist individuals and families who are considering or preparing for immigration to the UK. Moving to a new country involves various tax implications, and proactive planning can help you optimise your financial situation and minimise tax liabilities.

We navigate the complexities of UK tax regulations and tailor strategies to suit your unique circumstances. We work closely with you to develop a comprehensive tax plan that addresses key areas such as residency status, income taxation, wealth preservation, and inheritance planning.

By taking advantage of our Pre-arrival Tax Planning service, you can:

1. Understand the tax implications: We provide expert guidance on how UK tax laws apply to your specific situation, ensuring you have a clear understanding of your tax obligations and opportunities.

2. Optimise tax efficiency: We analyse your existing assets, investments, and income sources to identify opportunities for tax optimisation, allowing you to maximise your financial efficiency and retain more of your hard-earned wealth.

3. Mitigate tax risks: Our team helps you navigate potential tax risks and ensures compliance with UK tax regulations, minimising the likelihood of penalties or unexpected tax liabilities.

4. Preserve wealth and plan for the future: We assist in developing comprehensive wealth preservation strategies, including inheritance planning, to protect and grow your assets for future generations.

At Tika Accountancy, we are dedicated to providing personalised and tailored tax planning solutions that align with your goals and aspirations. With our Pre-arrival Tax Planning service, you can embark on your journey to the UK with confidence, knowing that your tax matters are in expert hands.

Contact us today to schedule a consultation and take the first step towards a seamless and financially optimised transition to the UK.

Below are some useful information that should be considered before immigration: