Definition and requirements

A person is considered a tax resident in the United Kingdom if:

• if they have, or have had, a home in the UK for all or part of the year
• if they spend 183 days or more in the UK during the tax year
• if they work sufficient hours in the UK

Days of presence

For the purposes of the calculation of days of presence in the UK within one or more periods, any part of the day of presence is regarded as a whole day (including the day of arrival and the day of departure).

Split tax residency

When you move in or out of the UK, the tax year is usually split into 2 – a non-resident part and a resident part.  This means you only pay UK tax on foreign income based on the time you were living here.  This is called split-year treatment.  You don’t need to claim split-year treatment – it is applied automatically.

You will not be entitled to split residency if you live abroad for less than a full tax year before returning to the UK.  You also need to meet other conditions.

Tax rate and tax period

• 0% is the applicable tax rate for annual taxable income up to GBP 12,570
• 20% on annual taxable income from GBP 12,571 to GBP 50,270
• 40% on annual taxable income from GBP 50,271 to GBP 150,000
• 45% on annual taxable income over GBP 150,000

The tax period runs from 6^th April to 5^th April each tax year.

Tax base and deductions

The UK tax base is calculated by determining an individual or a company’s income, profits, or capital on which taxes are levied. This includes wages, investments, and business profits, among other sources of income. The government also uses deductions, exemptions, and credits to adjust the tax base and determine the final amount of taxes that must be paid. The UK has a progressive income tax system, which means that individuals with higher incomes pay a higher percentage of taxes.

In the United Kingdom, certain types of income are not subject to tax. These include:

• Personal Allowance
  A certain amount of income is not subject to income tax, this is called the Personal Allowance and the amount changes each tax year.
• Capital Gains Tax (CGT) Allowance
  When an individual sells an asset that has increased in value, they may have to pay CGT on the gain. However, there is also a CGT Allowance, which is the amount of gain on which no CGT is payable.
• Dividend Allowance
  Dividend income is subject to tax, but there is a Dividend Allowance of £1,000 for the 2023-2024 tax year, which means that the first £1,000 of dividend income is not subject to tax.
• National Savings & Investments (NS&I) interest
• Premium Bond prizes
• ISA savings.

Some benefits in kind (non-cash benefits provided by an employer) are not subject to tax, such as workplace parking, a company mobile phone, or a company car.

It’s important to note that this is not an exhaustive list and the rules regarding taxable and non-taxable income can change from year to year.

Social security contribution rate and registration

The rate of social security contributions paid by the UK employer is:

• 0% up to GBP 9,100 per tax year
• 13.8% from GBP 9,101 per tax year

Social security contribution base calculation

On any income exceeding GBP 9,100, the employer will pay 13.8% as national insurance.

Health insurance is an optional benefit offered by employers to their employees in the UK. If an employer offers health insurance, the employee has to pay tax on the benefit, either via the payroll or via the submission of a P11D at the end of the tax year.

Personal income tax return filing

A review of whether the UK citizen is required to file a tax return for the applicable tax year will need to be undertaken, utilising the UK residency tests. If the UK citizen falls under the requirement to file in the UK, the submission requirement of the tax return will be the 31^st of January.

Avoiding double taxation

The UK have double tax treaties with a range of countries, full list can be found here. However, to ensure the correct application of tax is applied please ensure you speak to one of our tax professionals.

Personal income tax return filing

A review of whether the foreign citizen is required to file a tax return for the applicable tax year will need to be undertaken, utilising the UK residency tests. If the citizen falls under the requirement to file in the UK, the submission requirement of the tax return will be the 31^st of January.

Penalties related to tax

In the United Kingdom, you will get a penalty if you need to send a tax return and you miss the deadline for submitting it or paying your bill. You will pay a late filing penalty of £100 if your tax return is up to 3 months late and will have to pay more if it’s later, or if you pay your tax bill late. Interest is also charged on late payments.

Penalties related to social security

Interest will be charged on late payments of social security.