Expats in the UK: What You Need to Know About Tax
When you move to the UK, it’s important to understand the tax system. Knowing how taxes work can help expats save money and stay in compliance with the law. This guide will provide an overview of the UK tax system and advice on how to ensure you’re paying the correct amount of tax.
Understanding the UK Tax System
The UK has a progressive tax system, which means the more money you make, the higher percentage of tax you’ll pay. The basic personal allowance is the amount of money you can earn before you start paying income tax. This amount changes each year and is currently £12,500. After this, you’ll pay 20% on the next £37,500 and 40% on any income over £50,000.
Income Tax for Expats
Expats are subject to the same income tax rules as UK citizens. However, if you’re living abroad for more than 183 days in a tax year, you may be eligible for the Non-Resident Landlords Scheme. This means you won’t pay tax on any UK rental income.
National Insurance Contributions
National Insurance Contributions (NICs) are paid by both employees and employers. If you’re employed in the UK, you’ll need to pay NICs. However, if you’re self-employed, you’ll need to pay Class 2 and Class 4 NICs.
Tax on Investments
Any income you make from investments in the UK is subject to capital gains tax. This includes money made from selling stocks, bonds, and property. The rate of tax you’ll pay depends on your annual income.
Tax Advice for Expats
It’s important to seek professional advice if you’re unsure about the UK tax system. An accountant or tax advisor can help you understand the rules and make sure you’re paying the right amount of tax. They can also provide advice on how to save money and take advantage of any available tax breaks.