New Online Tool Helps British Expatriates to Calculate Tax Bill

British expatriates living throughout the world will soon benefit from the availability of a designated online statutory residency test that will allow them to quickly and easily calculate the fees that they owe to the UK tax authorities.

The online Residence Indicator for Tax, which is intended to provide a no-nonsense method of interpreting the complex tax residency rules that apply to UK citizens, will primarily be used as a method by which British expatriates can determine whether they are resident in the UK for tax purposes. If the tool determines that an individual is legally considered to be a British resident, despite the fact that they spend some time living overseas, they will be liable to pay tax on their worldwide income and gains. If non-resident they will be required to notify HM Revenue and Customs (HMRC) in the event that they do receive untaxed UK income.

It is anticipated that the online tool will simplify the complex residency rule system and help expatriates overseas to make sense of their tax requirements. The system will take a number of factors into account such as the number of days an individual spends in the UK, where they own a home and if they have family ties to the UK.

The tool is currently undergoing development and a HMRC spokesman has disclosed that it will be “shortly” available for use.

Speaking to UK newspaper The Telegraph, Dean Power, assistant tax manager and technical co-ordinator at The Fry Group voiced his approval of the planned tool: “The introduction of a statutory definition of residence for UK tax purposes is generally to be welcomed. It has been an area of UK taxation that has needed clarification for many years.

“However, while a defined set of rules now exists, there remains much complexity within the test that could lead to unexpected results for many.”

He warned expatriates against relying on the tool too heavily, disclosing that while the online system may provide a “good indicator of your position”, there are “specific definitions for each part of the test which need to be understood before any questions posed by an online tool can be answered.”

Mr Power added: “It remains to be seen whether such a tool would produce a definitive result for the individual. It is likely that any result produced by the online system would simply be for guidance only. That is to say that if the Revenue were to fully investigate circumstances at a later date, they are unlikely to be bound by any indication offered by the online tool.”

A HMRC spokesman acknowledged the fact that expatriates may still need to take professional tax advice and/or ensure they fully research the law in addition to using the tool: “HMRC has published guidance as to how the legislation will be interpreted, but it is only guidance and the answer in any particular case will depend on the facts.”

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