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They say that the sure things in life are death and taxes!

In the UK, tax matters are supervised under the watchful eye of Her Majesty’s Revenue and Customs (HMRC ).

Tax matters for expats tend normally to be complicated and require a high degree of knowledge on the particular subject. In view of this, you are strongly recommended to utilise the services of a professional tax advisor in order to ensure that your tax position and affairs are properly dealt with.

If you work in the UK, you will usually have to pay Income Tax and National Insurance on your revenues. How much you pay (and how you pay) depends on how much you earn, and whether you work for someone (employed), or for yourself (self-employed).
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The UK tax year

Unlike many other countries where the tax year coincides with the calendar year (i.e. from January to December), in the UK the tax year goes from the 6th April to the 5th April of the following year.

This is somehow confusing at first, but it is important information to bear in mind, especially in the year when you arrive or leave the UK in order to correctly file your tax return.

If, for example, you arrived in the UK in January 2010, during 2010 you will need to file a tax return report first for the tax year that goes from 6th April 2009 to 5th April 2010 and also for the tax year that goes from 6th April 2010 to 5th April 2011.


National Insurance

If you work in the UK, you will need to obtain a National Insurance number. To apply for a NI number, you will need to be 16 years of age or over and resident in Great Britain.

Your National Insurance number is your own personal account number. The number ensures that the contributions and the tax you pay are properly recorded on your account. It also acts as a reference number for the whole social security system.

You can apply for a NI number by phone at Jobcentre Plus, National Insurance number allocation service, Tel. 0845 600 0643.

Please be aware that if you are seconded to the UK by your foreign based employer different rules may be applicable to you (depending on your home country) on matters relevant to National Insurance.


Your residency status, in the UK, is a very important matter and can significantly affect your tax matters. In particular your “domicile” or “ordinary residence” status can affect the amount of tax you have to pay on foreign income and gains. Under certain circumstances, if you are considered to be “non domiciled” or “not ordinarily resident” you may either pay your taxes on foreign income and gains on an “arising basis” or on a “remittance basis” (where “arising” means that all your UK and foreign income and gains are taxed in the UK and “remittance” means that only the foreign income and gains which are remitted to the UK are taxed in the UK).

In simple terms, according to your residency status and under certain circumstances, you might be able to avoid paying UK taxes on income and gains made outside the UK, as long as you do not transfer these to the UK.

Tax rules tend to change frequently and this is a very complicated tax matter which requires appropriate planning and the advice of a professional tax adviser. According to their personal circumstances, most expatriates would fall into either the “non domiciled” or “not ordinarily resident” definitions. In view of this, you are strongly advised to seek professional tax advice on this matter.


Being employed

If you are employed, your employer will normally take Income Tax and National Insurance from your wages and pay it to HMRC.

When you first start working in the UK, your employer will usually ask you to fill in a HMRC form called “P46 Employee without a P45”. The information you put on this form will be utilised to ensure that you pay the right tax.

When you leave a job, your employer will usually give you a form called a “P45”. This shows your pay and the tax that has been deducted so far in the tax year.


Being self-employed

If you set-up your own business in the UK, you must register with HMRC as “self-employed” and pay your own tax and National Insurance.

To register as self-employed, you must have a National Insurance number and contact the Newly Self-Employed Helpline on Tel 0845 915 4515. Without a valid National Insurance number, HMRC will not be able to provide you with a Unique Tax Reference or set up your National Insurance account.

If you are self-employed and you earn above a certain amount during the tax year, you also have to register for VAT. The National Advice Service Helpline on Tel 0845 010 9000 (+ 44 292 050 1261 from outside the UK) can provide you with additional information.


Leaving the UK

If you leave the UK you must tell HMRC by contacting your Tax Office. This will usually give you a form called “P85” to enable you to get any tax refund you are owed and work out matters relevant to your residency status.


HMRC website

On the HMRC website you can find a lot of information on tax matters. In particular you might be interested in the page “Coming to work in the UK .

The HMRC website also allows you to register with them and enjoy access to all their online facilities.


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This page was last updated on 12.11.2010 
Expats Plaza is the website for the Expatriates living in the UK