Disclaimer: Information provided is for general knowledge only and should not be deemed to be professional advice. For professional advice kindly consult a professional accountant, immigration advisor or the Indian consulate. Rules and regulations do change from time to time. Please note that in case of any variation between what has been stated on this website and the relevant Act, Rules, Regulations, Policy Statements etc. the latter shall prevail. © Copyright 2006 Nriinformation.com
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NRI Information for OCIs - PIOs on PAN Cards, OCI, Visas, Property, Immigration, Customs Duties & more

UK Citizens living in India

Tax liability in the United Kingdom depends on your residential status for taxation purposes.  To limit their tax liability, UK residents who return to India for long term settlement, should take steps to let the tax authorities know they are leaving UK. 

Tax tips for UK Expats

Persons of Indian Origin (PIO) holding UK passports, should be aware that those who are deemed to have UK residence for tax purposes, are normally liable to be taxed on their worldwide income. Worldwide Income would mean that they would be required to pay tax on: 1. Income which arises in the UK 2. Income which arises outside the UK 3. Gains which accrue on the disposal of assets anywhere in the world.

How to declare Non- Residency in UK

One of the first steps, to adjusting your tax status, is to notify HM Revenue and Customs (HMRC) of your intention to leave the UK. This can be done by submitting a duly filled 'Form P85' to HMRC. Form P85 should be available from HMRC, a sample of this form can also be viewed at our website by  clicking HERE

Who is a resident or non-resident in the UK

Normally, if you live or work in UK you are a resident. To claim non-resident status you must live in the UK for less than 183 days. However, even if you are in the UK for less than 183 days, you could still be treated as a resident for the year. This is because physical presence in the country is not the only factor used to decide if a person is a non-resident for taxation purposes. On the other hand, physical presence in the UK for 183 days or more WILL make you a resident for tax purposes.

Tax in UK on basis of residential status

Being treated as a UK resident can have a big impact on your UK tax bill. While these pages are not meant to be offer tax advice, some highlights are provided.  Those who require more information should seek help from a certified tax professional.  UK citizens who are currently living in India and still own a home in the UK, or have considerable ties to UK should also be aware that a new 'Statutory Residence Test' is being proposed from April 2012.

Residents - Non Residents tax in UK

Those who meet the classification of being a resident of the UK for tax purposes are taxed on their worldwide income. It does not matter in which country their income is earned in. On the other hand, if you become a non-resident you will only be taxed on income that is earned in UK. Hence it is to your advantage to take steps to declare yourself as a non-resident, and notify the tax authorities of your intentions to leave the UK. OCI holders, who plan on relocating to India, should declare their intention to leave UK to the HMRC.  This should ideally be done before you leave or as soon as possible if you have already left the UK.

How not to lose your non-resident status in UK

Once you become a non-resident for tax purposes, you will not be taxed on your income that is derived outside UK. However it's important that you take steps to ensure that you do not lose your non-resident status.  A person can become a resident for tax purposes when one of the following applies: 1. If in any year, you spend in excess of 183 days in the UK  or 2. Spend over 90 days in the UK on average over the last four tax years; you will be classed as a UK resident. Most people seem to remember the 183 day rule, however many are probably not aware of the second condition (or fail to keep track of their visits to UK) and end up spending more than an average of 90 days in UK over the last four tax years.  When this happens, you will be classed as UK resident from the fifth year, and this would put your worldwide income at risk of being taxed in UK.

Things to do before leaving the UK permanently

UK citizens who are not domiciled in the UK, and/or not ordinarily resident in the UK can take advantage of special rules that apply to foreign income and gains. These rules allow them to pay UK tax only on the amount of their foreign income and gains that they take back or remit to the UK. To avoid paying taxes on your worldwide income in the UK, all social and family ties with the UK need to be severed. Some of the things that you should consider: 1. If possible, avoid visiting the UK in the first year of non-residency. 2. Keep future visits to UK at an absolute minimum 3. Remember that spending over 90 days in the UK on average over the last four years will make you a resident. Plan any visit to UK keeping this in mind.
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UK Citizens living in India

Tax liability in the United Kingdom depends on your residential status for taxation purposes.  To limit their tax liability, UK residents who return to India for long term settlement, should take steps to let the tax authorities know they are leaving UK. 

Tax tips for UK Expats

Persons of Indian Origin (PIO) holding UK passports, should be aware that those who are deemed to have UK residence for tax purposes, are normally liable to be taxed on their worldwide income. Worldwide Income would mean that they would be required to pay tax on: 1. Income which arises in the UK 2. Income which arises outside the UK 3. Gains which accrue on the disposal of assets anywhere in the world. How to declare Non- Residency in UK One of the first steps, to adjusting your tax status, is to notify HM Revenue and Customs (HMRC) of your intention to leave the UK. This can be done by submitting a duly filled 'Form P85' to HMRC. Form P85 should be available from HMRC, a sample of this form can also be viewed at our website by  clicking HERE

Who is a resident or non-resident in

the UK

Normally, if you live or work in UK you are a resident. To claim non-resident status you must live in the UK for less than 183 days. However, even if you are in the UK for less than 183 days, you could still be treated as a resident for the year. This is because physical presence in the country is not the only factor used to decide if a person is a non-resident for taxation purposes. On the other hand, physical presence in the UK for 183 days or more WILL make you a resident for tax purposes.

Tax in UK on basis of residential

status

Being treated as a UK resident can have a big impact on your UK tax bill. While these pages are not meant to be offer tax advice, some highlights are provided.  Those who require more information should seek help from a certified tax professional.  UK citizens who are currently living in India and still own a home in the UK, or have considerable ties to UK should also be aware that a new 'Statutory Residence Test' is being proposed from April 2012.

Residents - Non Residents tax in UK

Those who meet the classification of being a resident of the UK for tax purposes are taxed on their worldwide income. It does not matter in which country their income is earned in. On the other hand, if you become a non-resident you will only be taxed on income that is earned in UK. Hence it is to your advantage to take steps to declare yourself as a non-resident, and notify the tax authorities of your intentions to leave the UK. OCI holders, who plan on relocating to India, should declare their intention to leave UK to the HMRC.  This should ideally be done before you leave or as soon as possible if you have already left the UK.

How not to lose your non-resident

status in UK

Once you become a non-resident for tax purposes, you will not be taxed on your income that is derived outside UK. However it's important that you take steps to ensure that you do not lose your non-resident status.  A person can become a resident for tax purposes when one of the following applies: 1. If in any year, you spend in excess of 183 days in the UK  or 2. Spend over 90 days in the UK on average over the last four tax years; you will be classed as a UK resident. Most people seem to remember the 183 day rule, however many are probably not aware of the second condition (or fail to keep track of their visits to UK) and end up spending more than an average of 90 days in UK over the last four tax years.  When this happens, you will be classed as UK resident from the fifth year, and this would put your worldwide income at risk of being taxed in UK.

Things to do before leaving the UK

permanently

UK citizens who are not domiciled in the UK, and/or not ordinarily resident in the UK can take advantage of special rules that apply to foreign income and gains. These rules allow them to pay UK tax only on the amount of their foreign income and gains that they take back or remit to the UK. To avoid paying taxes on your worldwide income in the UK, all social and family ties with the UK need to be severed. Some of the things that you should consider: 1. If possible, avoid visiting the UK in the first year of non-residency. 2. Keep future visits to UK at an absolute minimum 3. Remember that spending over 90 days in the UK on average over the last four years will make you a resident. Plan any visit to UK keeping this in mind.
Disclaimer: Information provided is for general knowledge only and should not be deemed to be professional advice. For professional advice kindly consult a professional accountant, immigration advisor or the Indian consulate. Rules and regulations do change from time to time. Please note that in case of any variation between what has been stated on this website and the relevant Act, Rules, Regulations, Policy Statements etc. the latter shall prevail. © Copyright 2006 Nriinformation.com
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