Understanding tax allowances, deductions, and refunds for American expats living in the UK can be difficult without the help of an expert tax advisor. Common mistakes when filing taxes can be costly and they could delay payments. The basic allowance for taxpayers in 2021-2022 is £12,570 which means that there will be an income tax assessment for annual earnings beyond this amount. This amount applies to everyone, including American expatriates who are living in the UK. But, if US nationals earn more than £100,000, the amount of allowance will diminish. Taxpayers are not eligible for any personal allowances if they earn more than £125,000 and their income will be fully taxed.
Miscellaneous Tax Deductions
There are also special allowances for disabled people and married couples as well as other reductions and reliefs on UK income tax which could also apply. These tax deductions include:
Business Travel Reimbursement– taxpayers get 45p per mile of reimbursement for the 10,000 miles. Over that distance, it’s 25p per mile.
Business Trip Expenses– deductibles on business trips include accommodation, transport, parking fees, food, and drink.
Work Uniforms – taxpayers are reimbursed on uniform expenses, including repair, cleaning, and replacement of uniforms and protective clothing for certain occupations.
Membership Fees – there are also deductions on certain membership fees as approved by HMRC.
American expats who live in the UK may also be eligible for certain tax reliefs. Both self-employed professionals and salaried employees may claim tax reliefs if there are receipts for their expenses. Before getting a tax relief, salaried employees must get an adjusted tax code from HMRC through an online application. When filing their tax returns, self-employed professionals must declare tax reliefs and business expenses. Tax reliefs can include work from home expenditures, maintenance payments, charity contributions, and pension contributions.
US nationals may also be eligible for tax refunds in certain situations. They should inform HMRC if they have stopped working recently, have substantial proportion of the pay taken as tax payments or have taken out a life annuity plan.
Contact British American Tax
To learn more about tax allowances, deductions, and refunds for American expats living in the UK, 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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