Tidying Up your UK Tax
 A common question that we are asked is ‘Do I have to tell HM Revenue & Customs (HMRC) when I leave the UK?’
Surprisingly, the simple answer is ‘no’ - but it may be to your advantage if you do inform HMRC.
Once you are living overseas you will be mainly dealing with HMRC through their Centre for Non Residents. They have a comprehensive website where you can find more information and download all the forms mentioned below.
Form P85 - Leaving the UK
Tidying Up your UK Tax | Broadbase International
The purpose of a Form P85 is to inform HMRC that
you are moving abroad. For employees taxed under PAYE, a Form P85
should result in a tax refund to account for the fact that the
employment income ceased during the tax year. HMRC will make these
refunds during the
tax year.
Many people are under the impression that a Form
P85 must be
completed when leaving the UK. In fact, there is no legal requirement
to do so. If you choose not to complete the form then any refund due
under PAYE can be claimed after
the end of the tax year by completing a tax return in the normal way
(see ‘Form R43 ' below).
Form NRL1 - Non-Resident Landlords
Anyone leaving the UK with ongoing rental income
from a UK property should consider joining the Non-Resident
Landlords' (NRL) scheme by completing a Form NRL1. This will allow
rent to be received without tax being deducted at source. Without it,
the tenant or letting agent has an obligation to deduct 20% tax at
source (even if the tenant is a relative).
However, most non-resident landlords have no UK
tax liability because the net rents received are covered by the UK
personal allowance. Therefore, rents can be received without any tax
deducted at source by completing a Form NRL1 provided the taxpayer
agrees to submit tax returns and pay any tax which might be due by
self-assessment. Even if tax is payable on rental income then HMRC
will normally allow you to join the NRL scheme and you can account
for the tax under the self-assessment regime - when the taxable
amount is known.
Of course, if no tax is payable but tax has been
deducted at source then it can be reclaimed at the end of the tax
year by completing a tax return in the normal way (see ‘Form
R43 ' below).
Check the article on our UK website for more information on letting out your house in
the UK when you emigrate to New Zealand.
Form R105 - Bank and Building Society
Interest
Form R105 should be submitted to your bank or
building society to ask them to pay you interest without deducting
tax at source.
A non-resident is taxable in the UK on any bank
interest received but for most New Zealand residents the total amount
of UK source income is less than the personal allowance. If this is
the case, then you should complete a Form R105 and send it to your
bank/building society. The Form R105 is technically just a statement
confirming that you are not ‘ordinarily resident' in the UK and
can be completed if you have left the UK permanently.
Again, as for the Forms P85 and NRL1 above, if you
have chosen not to complete a Form R105 you can tidy things up at the
end of the tax year and claim any repayments that might be due by
completing a tax return (see ‘Form R43' below). However, by
receiving the amounts free of tax in the first place you will obtain
a cash flow benefit and also avoid the hassle of submitting a tax
return.
Form R43 - Tax Repayment Claim
If you have paid tax in the UK either via PAYE,
interest deducted at source or by tax suffered at source on rental
income then it may be possible to obtain a refund after the end of
the tax year by completing a Form R43.
However, in some cases HMRC will insist on the
completion of a full self-assessment return rather than a Form R43.
In such cases, unless you are familiar with completing your own
self-assessment tax returns in the past, we would recommend that you
seek professional advice.
Tax on UK Pension Income
Finally, some UK migrants receive pension income
from a UK private pension - this may be a company pension or an
annuity/income drawdown. It should be possible to claim exemption
from UK tax for your private pensions but this claim is subject to
the UK/New Zealand Double Tax Treaty.
We recommend that professional advice be taken in
these cases as there have been several occasions where both HMRC and
the IRD have given incorrect advice on the tax treatment of UK
pensions or incorrectly processed such claims under the Double Tax
Treaty. Again, we suggest you seek professional advice to clarify
your situation.
Check our article more information on tax on both UK and NZ pensions in New Zealand.
This article was compiled with assistance from
Martin Riley of Sterling Tax Services,our preferred tax services provider. Martin has unrivalled expertise
on UK and NZ tax issues, and we do not hesitate to recommend him to
any of our clients requiring tax advice.
Don't hesitate to contact us if you have any questions about your tax position as a UK migrant to New Zealand or a Kiwi returning from the UK.
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