Any time we are dealing with an expat, a foreign employee who is working here in the UK, or a foreign national doing business in the UK and abroad, there are certain tax implications that we encounter. While challenging and sometimes downright odd in nature, we must still adhere to these tax laws and misunderstanding them is no longer an excuse as penalties for compliance failures could be imposed.
5 Common Misconceptions About The UK Taxation Of Expats
Part of understanding UK tax laws includes knowing the difference between fact and fiction. We are going to take a look at some of the most common misconceptions people have about the taxation of expats here in the UK.
The “My Salary Is Paid Overseas” Misconception – even if a foreign company is paying your salary overseas, you will still have UK taxes to pay. Many believe that since their salary is paid overseas or in their home country, they will have no UK taxes.
The “Non-Resident Directors” Misconception – if you are a non-resident director of a UK company and you don’t spend very much time in the UK, you will still have to pay UK tax. There has been a popular misconception to the contrary as many non-resident directors are avoiding establishing a tax residence here in the UK. For those trying to avoid filing a UK return or who might have income that is chargeable to UK tax, a fine could be imposed.
The “183 Days” Misconception – many believe that if they spend less than 183 days in the UK, they aren’t liable for UK taxes. This is false and it depends on a wide range of factors including instances where costs are recharged to the UK and more.
The “UK National Insurance” (“NICs”) Misconception – expats and foreign employees working in the UK often believe that they don’t need to pay UK social security taxes. However, both employees and employers might be required to pay UK NICs unless an exemption certificate issued from their home country under a social security agreement.
The “Non-UK Employer” Misconception – another common misconception is that if someone is employed overseas, they won’t have any UK tax obligations. In reality, it doesn’t matter where the individual is employed, they might still have tax obligations here in the UK.
If all of this sounds confusing, contacting an experienced UK tax professional can help you to understand and comply with today’s UK tax laws.
Contact British American Tax
To learn more about the common misconceptions about the UK taxation of expats, contact British American Tax today and consult with an expert tax advisor who can answer any questions you might have about taking a pro-active approach to your tax planning.
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