5 Tax Mistakes British Expats Should Avoid to Keep Their Finances on Track
British expats, or individuals who reside outside the United Kingdom while maintaining their British citizenship, face a unique set of financial challenges. One such challenge is ensuring compliance with UK tax laws while living abroad, and failure to properly report and pay taxes can result in hefty fines and penalties. To help British expats keep their finances on track, we have compiled a list of the top 5 tax mistakes to avoid.
1. Failing to report foreign income and assets
British expats must report any foreign income and assets to the UK tax authorities. This includes income from employment, investments, and rental properties. Failure to disclose this information can result in significant fines and penalties. Additionally, failing to report foreign assets can trigger a tax investigation, which can be time-consuming and costly.
2. Not claiming the Foreign Tax Credit
Many countries have a double taxation agreement with the UK, which means that taxes paid in a foreign country can be offset against UK taxes. British expats can claim the Foreign Tax Credit to reduce their UK tax liability; failure to claim this credit can result in overpaying taxes.
3. Not registering for Self-Assessment
British expats are required to register for Self-Assessment if they have UK income or gains that are not taxed at source. This includes rental income, self-employment income, and income from foreign employment. Failure to register can result in fines and penalties.
4. Not keeping accurate records
British expats must keep accurate records of their income and expenses to prepare their tax returns. This includes receipts, invoices, bank statements, and other financial documents. Failure to keep accurate records can result in mistakes on the tax return, which can trigger a tax investigation.
5. Not planning for UK inheritance tax
British expats may still be subject to UK inheritance tax on their worldwide assets, even if they reside outside the UK. Failure to plan for this tax can result in a large tax bill for the estate’s beneficiaries. Planning for inheritance tax includes making a will, setting up trusts, and using the available exemptions and reliefs.
How can we help
We have a highly skilled and experienced team of experts at Hoxton Tax, specialising in cross-border tax planning and helping clients in more than one jurisdiction avoid unnecessary taxation on their asset portfolios.
Mark Routen’s team will be happy to discuss all aspects of your tax planning concerns, including:
- Relocation Advice
- Capital Gains Tax Advice and Computations
- Asset Structuring for Tax Mitigation
- Inheritance Tax Planning
- Trusts and Family Investment Companies
- Pension Transfer Advice / Reports
- UK Tax Returns
- NT Tax Codes
Contact the tax team today for a free initial discovery call.
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