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Expat Tax Planning in 2019

What are your tax planning obligations?

The difficulty for many expats is that they may not be aware of the scope of their UK tax liabilities. This is why taking tax planning financial advice from a qualified financial adviser is essential.

Even innocent oversights can result in expats being asked to repay 200% of the liability owed. If you have UK-based investment portfolios, UK rental property or indeed overseas assets, all of these things can create a UK tax liability, particularly for those who live more than half the year in the UK.

Being fully aware of legal residency status and its impact can help prevent expats from unwittingly failing to pay their tax liability. Even once they are aware, there may still be plenty of work ahead as HMRC’s rules are complex and, without expat tax planning advice, can create unnecessary confusion.

UK resident or expat

You are deemed a UK resident in if you spend 183 days of the year in the UK and therefor have to pay UK tax on all of your income, regardless of where it was earned.

Expats only pay tax on income earned in the UK, although they may have a number of expat tax planning options to choose from depending on their circumstances. A person is considered a non UK resident if they meet certain “automatic overseas” rules such as spending fewer than 16 days in Britain and being resident in the UK for any of the preceding three years, or, in the case of those who have not been resident in the UK for three years, fewer than 46 days.

However, there are various other categories for tax purposes, so it is important to seek expat tax planning advice from your wealth manager in this regard.

Blacktower Financial Management

Blacktower FM offers a range of expat tax planning services to help you negotiate capital gains tax, inheritance tax, income tax and other liabilities.

For more information, contact our cross-border financial advice specialists today.

This communication is for informational purposes only and is not intended to constitute, and should not be construed as, investment advice, investment recommendations or investment research. You should seek advice from a professional adviser before embarking on any financial planning activity. Whilst every effort has been made to ensure the information contained in this communication is correct, we are not responsible for any errors or omissions.

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No flexible access for Gibraltar QROPS

Gibraltar LighthouseOn April 6, many new regulations for QROPS came into effect. These changes were made to make the taxation of foreign pensions more in line with UK pensions. Any QROPS not registered as being compliant with the new rules by April 5 could be delisted by HMRC.

One significant change means that, as long as they qualify under the other requirements, it’s no longer compulsory for schemes to adhere to the “70 per cent” rule. This is a rule that ensures providers ring fence 70 per cent of the pension contributions transferred into the QROPS in order to provide the saver with income for life.

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What is ‘non-dom status’ and ‘residency status’?

Your des-res might be a gorgeous sea-front apartment overlooking the med, or a rural stone cottage nestled amongst the vineyards of Burgundy, but wherever you live, once you are settled, understanding whether you are domiciled, non-domiciled or resident can be a bit confusing. However, clarity is essential: the amount of tax you pay hinges on knowing the difference and the relevance of each non-dom status versus residency status.

Firstly, don’t just guess your residency or non-dom status, because if you get it wrong, you could pay too much tax or pay it in the wrong place, and failure to pay can lead to large fines and penalties. Sadly, mis-payments are not tolerated; your tax planning may be well-intentioned, but if you don’t pay the correct amount of tax in the appropriate jurisdiction, you could be in hot water, so it is vital to get it right.

Generally, we recommend that you speak to a financial adviser working in your local region who will understand the jurisdictional rules applicable to your location and personal situation, but as a brief guide, read on and we will explain the fundamentals.

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