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Jan 16th 2025
By GoSimpleTax
Some 5.5m expat Brits are estimated to live outside of the UK, with 1.3m living in Australia alone. The other major English-speaking countries, New Zealand, the USA and Canada are also hugely popular with expat Brits, while a reported 400,000 expats live in Spain and almost 240,000 now live in Dubai.
Many expats still earn income from the UK, whether from a business or renting out land or property in the UK, and this can be subject to UK tax, even if you’re a non-domiciled expat Brit. There are some things about the UK that you simply can’t leave behind.
Your UK residence status determines whether you pay tax in the UK on your foreign income.
● Non-residents only pay UK tax on their UK income, not their foreign income.
● Residents usually pay UK tax on all of their income, whether from the UK or another country.
● UK residents (who were born outside of the UK ie non-doms) do not have to pay UK tax on their foreign income or capital gains if less than £2,000 in the tax year, provided they claim the remittance basis on their Residency pages (SA109) and don’t bring them into the UK (eg by transferring them to a UK bank account).
● If a UK resident’s overseas income or gain is £2,000 or more or they bring money into the UK, they must report it to HMRC via a Self Assessment tax return. They can then either pay UK tax, which they may be able to reclaim, or they claim the remittance basis, so that they only pay UK tax on the income or gains they bring to the UK, but lose tax-free allowances for Income Tax and Capital Gains Tax and pay an annual charge of either £30,000 (if they’ve been in the UK for at least seven of the previous nine tax years) or £60,000 (if they’ve been in the UK for at least 12 of the previous 14 tax years).
● Visit government website GOV.UK for more information on paying tax on foreign income.
If you live overseas and have taxable UK income to report to HMRC, each year you’ll need to fill out and file a Self Assessment tax return (SA100), as well as the resident supplementary page (the SA109 form) to report your residence and domicile status.
Depending on your sources of taxable income, you’ll also need to complete supplementary pages, for example, as SA105 if you earn UK taxable rental income, or an SA103 if you’ve received taxable UK income from self-employment. Government website GOV.UK provides a full list of Self Assessment tax return supplementary pages.
Once registered, to complete your Self Assessment tax return you will need:
● your ten-digit UTR (Unique Taxpayer Reference) number, which enables HMRC to identify you as a taxpayer. It will be printed in previous tax returns and any tax letters that HMRC may have sent you in the past
● your National Insurance number (you’ll find it in your Personal Tax Account, previous payslips, P60s, personal tax letters, etc)
● summary totals of all UK taxable income that you received within the tax year, which could come from self-employment, employment, rental income, share dividends, pensions, savings interest, state benefits, capital gains, etc
● summary totals of relevant UK tax expenses for which you wish to claim UK tax relief
● details of pension schemes payments you’ve paid during the tax year.
One important thing to note is you can’t use HMRC’s online services to file your Self Assessment tax return and any supplementary pages if you live outside of the UK. You can use a UK-based accountant to do it for you, which obviously involves paying a fee, or you can use commercial Self Assessment filing software, which is much cheaper and fairly simple. The Self Assessment online-filing deadline is midnight on 31 January following the end of the tax year (5 April) to which the tax return refers. These dates are the same every year. Once you’ve filed your tax return, HMRC will tell you how much tax you owe and how to pay it.
Many people who go to live and work overseas rent out their UK property or properties. If you earn more than £1,000 you exceed your property allowance, and your rental income can be subject to Income Tax, once your total taxable income goes over the Personal Allowance (£12,570 a year in 2024/25). The amount of tax you’ll pay will be determined by which Income Tax band your total taxable income falls into. Capital Gains Tax can also be payable if you make a “chargeable gain” from selling UK property or land.
If you live outside of the UK for six months or more a year, you’re classed as a “non-resident landlord”. You can get the full rent from your tenant(s) and pay tax on it to HMRC via Self Assessment or the tax you owe can be deducted by your letting agent or tenant, who must pay it to HMRC. They must give you a certificate at the end of the tax year showing the tax that they’ve deducted.
Landlords can claim “allowable expenses” to cover the costs they have to pay to rent out their property. Claiming allowable expenses can reduce your rental income profits and the UK tax you must pay as a result. GOV.UK provides more detailed information about paying UK tax on UK property rental income.
The country overseas in which you live might tax you on your UK income. If it has a “double-taxation agreement” with the UK, you can claim tax relief in the UK to avoid being taxed twice.
About GoSimpleTax
Self Assessment Tax Return Made Simple.
You don’t need to be an expert to complete your Self Assessment tax return, get started with GoSimpleTax today, it’s free to try.
Our software submits directly to HMRC and is the digital solution for the Self-Employed, Freelancers, Sole Traders and anyone with income outside of PAYE. The software will provide you with hints and tips that could save you money on allowances and expenses you may have missed.
Get started with GoSimpleTax today, it’s free to try.
Jan 10th 2025
By GoSimpleTax
OK, so yet again you’ve left sorting out your Self Assessment tax return until far too late, despite promising yourself that you wouldn’t ever let it happen again. Tut, tut. The online filing deadline, which is midnight on 31 January, is now fast approaching and you’re beginning to panic.
First things first: stop panicking. No good ever comes from panicking. Instead, take control of the situation. There are steps that you can take today that will enable you to get your Self Assessment tax return done and dusted quickly and with minimum fuss, so you can get on with other things.
Step 1: Gather the tax return information you need
Obviously, you should already be registered for Self Assessment. If not, visit government website GOV.UK to find out how to register for Self Assessment).
If you don’t have everything to hand that you need to complete your Self Assessment tax return, having to go and find it will disrupt the process. Getting it all together before you start will speed things up considerably. You will need:
● your ten-digit UTR (Unique Taxpayer Reference) number, which enables HMRC to identify you as a taxpayer. It will be printed in previous tax returns and tax letters that HMRC has sent you
● your National Insurance number (you’ll find it in your Personal Tax Account, previous payslips, P60s, personal tax letters, etc)
● summary totals of all UK taxable income that you received within the tax year, which could come from self-employment, employment, rental income, share dividends, pensions, savings interest, state benefits, capital gains from sale of taxable assets, tips and commission, etc
● summary totals of tax expenses for which you wish to claim tax relief
● details of pension schemes payments you’ve made during the tax year.
Step 2: Know which supplementary pages you must also complete
As well as the SA100 (the main Self Assessment tax return), you’ll probably need to complete supplementary pages to provide details of specific types of taxable income. Sole traders must complete the SA103 self-employment supplementary pages, while those who have earned taxable UK rental income must complete SA105. Non-UK income or gains must be reported via an SA106 and you need to use an SA108 to report taxable capital gains after selling an asset. Visit government website GOV.UK for a full list of Self Assessment tax return supplementary pages.
Step 3: Use Self Assessment tax return-filing software
You can complete and file your Self Assessment tax return online. You sign in using your Government Gateway user ID and password. HMRC publishes online guidance notes on filling in your tax return, but having to stop to read up every time you need to fill in part of your tax return makes the process slow and laborious. Plus, if you don’t understand something, there’s nothing to prevent you from making mistakes that later cost you time and money.
For speed and added peace of mind, many people use commercial tax return-filing software, because it prevents simple mistakes and saves a lot of time and hassle when you’re completing Self Assessment tax returns. If you use accounting software, key numbers can be quickly pulled through into the right places within the tax return-filing software, with the necessary supplementary pages also added once you specify your sources of taxable income. The software holds your hand through the process, with automatic prompts helping to prevent basic mistakes.
An annual subscription for decent tax return-filing software can cost less than £60 a year, which is much less than paying an accountant to fill in and file your tax return (and you’ll still have to gather together all of the information the accountant needs).
Step 4: Pick the right day, time and place
Set aside a morning or afternoon to complete your Self Assessment tax return. Make it a day when you’re less busy with other things. Also pick a place that’s quiet and free from distractions, where you can focus on the job in hand. If possible, avoid doing it at night when you’re feeling more tired, because you’ll take longer and there’s a greater chance that you’ll make a mistake. If you do it earlier in the day, you should be more awake and alert. If family members are going to be nearby, they should know not to disturb you because you need to be able to concentrate on completing your tax return.
Step 5: Complete your tax return in one session
Commit to getting your tax return done in one sitting, because that should mean you get it done in less time. Ignore your emails, messages and calls. Make yourself a nice cuppa, relax and begin to methodically work your way through your tax return and supplementary pages. About three hours should be more than enough to get the job done if you’ve first gathered together all of the information you need. You may do it quicker, especially if you use Self Assessment tax return filing software – but don’t rush. Get it right the first time. Keep on going, don’t stop and don’t allow yourself to become distracted. When completed, leave yourself enough time to quickly check through your tax return at the end, just to make sure you haven’t left anything out.
In future, try to avoid leaving it so late. You can file your Self Assessment tax return any time after the UK tax year ends on 5 April. If you’re not already doing so, using accounting software to record your income and expenses really makes it much easier to get the summary figures you need for your tax return. For now, good luck with getting this year’s Self Assessment tax return off your plate.
About GoSimpleTax
Self Assessment Tax Return Made Simple.
You don’t need to be an expert to complete your Self Assessment tax return, get started with GoSimpleTax today, it’s free to try.
Our software submits directly to HMRC and is the digital solution for the Self-Employed, Freelancers, Sole Traders and anyone with income outside of PAYE. The software will provide you with hints and tips that could save you money on allowances and expenses you may have missed.
Get started with GoSimpleTax today, it’s free to try.
Dec 17th 2024
Article Provided By GoSimpleTax
The weeks leading up to Christmas bring a welcome sales boost to many British businesses, including a large proportion of the UK’s 3.1m sole traders. And although business owners will get a lot of extra festive cheer from selling more and increasing their annual sales revenue, it can bring additional tax-reporting responsibilities, which some sole traders need to be aware of.
If additional Christmas sales do push your annual side-hustle sales income over the trading allowance threshold, what does it actually mean for you?
The trading allowance is a tax exemption that enables people to earn up to £1,000 a year in trading income from self-employment (eg selling products or services online or offline), casual work (eg gardening, babysitting, decorating, dog walking, etc) or hiring out personal equipment (eg power tools).
If your annual gross income (ie the total amount of money you earn before taxes and deductions) from self-employment, casual work or hiring things out is £1,000 or less, you don’t need to tell HMRC.
That may have been the case for you so far, but if strong sales in the run-up to Christmas pushes your trading income over the £1,000 trading allowance threshold, you need to let UK tax authority HMRC know, which means having to register for Self Assessment.
Self Assessment is the system that HMRC uses to collect Income Tax from sole traders, freelancers, members of business partnerships, small private landlords, etc.
If you’ve registered for Self Assessment before, you don’t need to register again, you simply need to reactivate your Self Assessment account by signing in via government website GOV.UK to access HMRC’s online services. You’ll need your Government Gateway user ID and password (GOV.UK explains what to do if you’ve lost your Government Gateway user ID and password).
You must register for Self Assessment before 5 October following the end of the tax year during which you earned taxable income. The UK tax year is 6 April until the following 5 April. Register as soon as possible, because then you’ll have plenty of time to complete and file your Self Assessment tax return before the online-filing deadline (midnight on the 31 January). There’s an immediate automatic £100 fine for missing the online-filing deadline.
When you register as a sole trader, you’ll be registered for both Self Assessment and National Insurance contributions (NICs). Class 4 NICs are payable once your total profits reach £12,570 a year. For the 2024/25 tax year, Class 4 NICs are 6% on profits between £12,570 and £50,270, then 2% thereafter.
After you register, you’ll get your Unique Taxpayer Reference (UTR) through the post within 15 working days (21 days if you live outside of the UK). You’ll get your UTR sooner if you use the HMRC app. Your UTR is a unique ten-digit code that enables HMRC to identify you as a taxpayer.
As stated previously, once registered, each year you must submit a Self Assessment tax return, summarising your taxable income from all sources, as well as any tax expenses, reliefs and allowance you want to claim.
As a registered sole trader, by law you must maintain accurate, up-to-date financial records, detailing your sole trader sales and expenses. Most people use bookkeeping software. These records enable you to accurately complete your Self Assessment tax return.
You don’t pay tax on your first £12,570 of your total income, because this is your tax-free Personal Allowance.
Thereafter, Income Tax can be payable on your sole trader “net profits”, which is your total sole trader sales minus any tax expenses that you wish to claim. HMRC must deem these “allowable” (here are 45 expenses that HMRC does allow). You may also be able to claim other tax allowances that further reduce your tax bill.
Your sole trader tax bill will be determined by the Income Tax band into which your total taxable net income falls. This is net income from all taxable sources, not just your sole trader profits. Your total taxable net income can include income from a full-time or part-time job (although you will have already paid tax on this), share dividend payments, savings interest, pension payments, renting out property or land, etc.
● You’ll pay the basic rate of Income Tax (20%) if your total taxable income is between £12,571 and £50,270.
● You’ll pay the higher rate of Income Tax (40%) if your total taxable income is between £50,271and £125,140.
● You’ll pay the additional rate of Income Tax (45%) if your total taxable income is more than £125,140.
*2024/25 for all figures, England, Wales and Northern Ireland. Income Tax bands and rates are different in Scotland.
Even if you have to register for Self Assessment following a bumper Christmas season, if you’re selling on a relatively small scale, your tax bill may be relatively small. If your net taxable income is below the Personal Allowance, you’ll pay nothing. To minimise your tax bill, be sure to claim all of your tax expenses. Recording them all as and when you pay them can be the best way to ensure that you don’t forget to claim any.
Having to complete a Self Assessment tax return every year could well be a new additional faff that you would rather do without, but using good Self Assessment tax return-filing software can make this much simpler, quicker and far less painful. It can cost as little as a fiver a month, which usually proves to be money well spent.
About GoSimpleTax
Self Assessment Tax Return Made Simple.
You don’t need to be an expert to complete your Self Assessment tax return, get started with GoSimpleTax today, it’s free to try.
Our software submits directly to HMRC and is the digital solution for the Self-Employed, Freelancers, Sole Traders and anyone with income outside of PAYE. The software will provide you with hints and tips that could save you money on allowances and expenses you may have missed.
Get started with GoSimpleTax today, it’s free to try.
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