Dubai tax-free living has always been attractive for skilled expats from all over the world. Indeed, the idea of working in Dubai and having an opportunity to grow your personal wealth without tax reductions is extremely appealing.
Even if you no longer live in the United Kingdom, under certain circumstances you may still be required to file tax with HMRC. For UK residents and non-residents tax rules are very different and it is important to find out tax residency status.
Tax residence status:
HMRC uses their Statutory Residence Test to determine whether you are a tax resident which incorporates a number of factors. Most common and expensive, mistake non-residents make is reading about it on the internet, and establishing their residence status. Figuring out tax residence status can be complicated, and one should always seek advice from a qualified accountant. As already discussed getting it wrong might be very expensive.
Self Assessment tax return:
A Self Assessment tax return is a declaration of the income you have received during a tax year. For example, the 2013/14 self-assessment tax return covers the tax year ended 5 April 2014. Note the tax year begins on 6 April and ends on 5 April. The tax return will enable the HMRC to calculate how much tax you owe in the UK, or any rebates which are owed to you, from the income you received during the tax year under review.
Under normal circumstances, if the HMRC deems that you are required to complete a Self Assessment tax return, they will send you a notification once the tax year has ended and will be due to be submitted by October 31st (by paper) that year or January 31st the following year if submitted online. Any tax payments will be due by 31st January. You may also need to make a payment on account on 31 July.
Example: You are requested to submit a tax return for the tax year 2014/15. You receive a notification in the post in May 2015. Your tax return will be due by October 31st, 2015 if you intend to complete your tax return by post. If you are filing your tax return online, it must be submitted by 31st January 2016. All payments must also be received by January 31st, 2016.
Non-resident tax return requirements:
If you are deemed to be a non-UK resident, it may still be necessary to complete a tax return if you have a UK source of income even if you owe no tax.
Typical scenarios that may require a Dubai tax return for nonresidents to be completed include:
- The expat is director of a UK company
- The expat receives profits from a UK partnership
- The expat earns an income in the UK.
- The expat does not live in the UK but does some or all of your work in the UK
- The expat receives UK rental income
- The expat make capital gains from the sale or disposal of assets in the UK
Income received from investments (eg. interest or dividends) typically does not have to be declared if they are your UK only income and the total is less than £10,000. If you work in the UK unless tax has already been deducted by your employer through pay as your earn scheme, any work you do will be taxable and you will, therefore, be required to complete a tax return.
It is also important to remember that you may have to be taxed on your income in your country of residence if it is not in the UK. The UK does, however, have double taxation treaties with some countries which means that tax is only payable in one country.
Non-resident tax return penalties:
If you file or pay your Self Assessment after the 31st January you will incur a penalty.
> 1 day late: Initial penalty of £100
> 3 Months late: Automatic penalty of £10 per day up to a maximum of £900
> 6 months late: A further penalty of the greater of £300 or 5% of the tax that would have been due and payable if the Return had been submitted on time
> 12 months late: Another penalty of £300 or 5% of the tax that would have been due and payable if the Return had been submitted on time.
In addition to the above, you will be required to pay tax geared penalties and interest on any outstanding tax payments. so, if you want no penalties hire someone to take care of your tax problems like income tax, Corporate tax, municipality tax, withholding, and federal tax. Accountants in Dubai of ideal Accountants are experienced in tax laws and serve several clients with his services like Expat tax returns, Bookkeeping, VAT Returns, Management of Accounts, Payroll and Company formation
We assure clients satisfaction by a dedicated consultant assigned for each client, who is always at their service. Our consultants take informed decisions on your behalf and guide you through every aspect.