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Recent events in the Middle East have led to many people or their families looking to spend more time in the UK, or other countries, than they had previously planned.
It could be that you are avoiding or hesitating on returning to the UK for fear of increasing your tax exposure. Seeking advice now may enable a plan to be put in place allowing you to spend more time in the UK without triggering adverse tax liabilities.
Why your residence status matters
Your UK residence status for tax purposes is determined by specific rules set out in legislation by the Statutory Residence Test (SRT). Your resident status is determined by a number of factors including where you work and where you have a home, as well as how much time you and your family spend in the UK.
Whether you have only recently left the UK, or have been non-resident for many years, any changes to the above could have a significant impact on your exposure to UK income tax, capital gains tax and inheritance tax.
There are possible implications including:
It may be previous assumptions that split year treatment will apply for departures in years to 5 April 2025 or 2026 are no longer correct.
If your non-resident status is based on working full time overseas, this may no longer apply making it more likely you are UK resident under other tests.
If you are relying on the “sufficient ties test” if your spouse and/or children have returned to the UK this could reduce the time you can spend here.
Treaty relief could apply to help you retain non-resident status or reduce your tax as a UK resident but is unlikely to apply for inheritance tax purposes. This could be particularly relevant if you were not UK domiciled when you left the UK before April 2025. A short period in the UK could expose your worldwide estate to UK Inheritance Tax for up to the next 10 years.
Matters could be further complicated if you have set up overseas companies, or you have links to overseas trusts, either as the Settlor, trustee or beneficiary these could be brought within UK tax.
Seek advice sooner rather than later
Anybody who has previously received advice but believes their circumstances have changed should seek updated advice as soon as possible. Anybody who has not received advice should consider very carefully whether this should now be obtained.
Please contact us if you would like to discuss your circumstances.