Non-Resident Status in the UK

Hey there – how are you? I am off to an outdoors Blues concert tonight…very brave of me I might add! The last one I attended saw me sitting like a ghostly wraith in the pouring rain, in a waterproof poncho thoughtfully provided by concert hosts. It was most enjoyable but did I ever get the mother and father of all colds! Wish me luck tonight…

A question I am often asked these days by people who are moving abroad is this: exactly when are you considered to be a UK resident, or to turn this question on its head, when are you considered a non-resident? This has become one of the most controversial and worrisome aspects of emigration recently, largely due to the tax implications that accompany it.

Evidently, according to a recent Court of Appeal decision in the long drawn out Gaines Cooper saga, it is no longer enough to conform to the rules as laid down by HM Revenue & Customs. These laid down that, to prove non-residency, you needed only to show that you didn’t spend more than 90 days a year on average in Britain over four years.

Now the taxman is allowed to scrutinise in more detail whether non-residents have made what they consider to be enough of a break from the UK.

So…how do you make sure that you qualify for non-resident status?

In most EU countries an individual is not considered a resident unless 183 days are spent there each year. In the UK, it is 90 days on a rolling four-year average, although you can spend up to 183 days in any given year. Things like visiting offspring or grandchildren in the UK will count toward your 90-day limit. Incidentally there are dispensations if you are visiting someone because of an emergency. If a member of your family is terminally ill for example, you may be able to stay for more than the average 90 days over four years. However, you would not be able to stay for more than 183 days in any given year without risking your status.

But this is no longer the only criterion; continuing connections with the country will now be taken into account, and this can be a very grey area.

Keeping a house or a car in the UK, maintaining membership of a private club, or even regularly attending social events such as Royal Ascot or Wimbledon can now be used against you in terms of proving your non-resident status. Needless to say, this new vigilance has largely been brought about in an effort to check up on those seeking to avoid the new 50% tax rate imposed on the super-rich.

Individuals must prove an intention to leave the UK permanently or indefinitely. Recent Court decisions on residence tend to be in favour of HMRC and there is no doubt that they are actively pursuing cases where, in its view, the taxpayer has not done enough to demonstrate that they have ceased to be UK resident.

What does this mean to you? Well, the bottom line is that you need to sever as many ties with the UK as possible. It is no longer sufficient just to stay abroad for the obligatory period and tally up days spent in the UK. You have to be able to demonstrate a complete break with the country.
To do this you may want to consider adopting the following measures:

Property in the UK:

• Sell your UK property or let it out for at least 12 months - do not leave it unoccupied
• If you are letting the property, ask a UK agent to deal with the property on your behalf
• Pay all property bills before you depart the UK
• Notify your house insurers that you are emigrating and adjust the insurance accordingly
• Notify your mortgage lender that you are emigrating
• Notify your local council that you no longer reside at the property
  

Business matters in the UK:

• Consider resigning from any UK company directorships or company secretarial positions
• Consider disposing of your UK business interests altogether
  

Other UK matters:

• Notify your UK doctor and dentist that you have left the UK
• Cancel your UK sporting and social club memberships
• You would be wise to appoint an attorney in the UK who is empowered to deal with your UK affairs
  

Taxes

• Send the completed form P85 to HMRC, declaring that you are a non-resident
• You would be well advised not to return to the UK for an entire tax year if possible to emphasise the break in residence
• Do not return to the UK for more than 90 days a year in subsequent tax years, remembering to factor in travel days in this number
  

Finances

• Cancel all UK credit cards and reduce balances in your UK bank accounts
• Pay all UK accounts and close them. Demand evidence that they are closed in the form of a letter of acknowledgement
• Consider transferring pension arrangements overseas.
  

Cars

• Sell your car and cancel your car insurance and subscriptions to motoring organisations
  

In your new country of residence - once you have moved abroad:

• Establish employment or business links in the new country if you are planning to work there
• Obtain a residence permit where necessary
• Contact the local tax authorities to inform them that you have become a resident
• Purchase or rent on a long lease a property locally and buy a car there
• Register with a doctor and dentist in your new country of residence and open a local bank account
• Establish social and cultural connections in your new homeland. Perhaps join clubs, register children at schools etc.
• Have a will drawn up in your new country of residence

What you need to do is make sure that you have effectively cut off ties with the UK in terms of living here. The overall pattern of your life must reflect your declared non-resident status and the fact that you have left the UK for the foreseeable future.

Carol
http://www.PortugalBuyingGuide.com