If you are thinking about pursuing British immigration, you should consider how much you will pay in tax if you come to live in the UK. There are several different factors that will determine what kind of taxes you are subject to as a foreigner in the country. The nature of your income, your means of employment, and your residency status contribute to the specific taxes you will pay, and what rate you will be subject to as a non-citizen. Today’s blog will therefore help you determine how much you will pay in tax if you come to live in the UK. Keep reading to learn more about the UK tax system, including UK tax for foreign income, the relevant tax if you return to the UK from abroad, and when to report your income to HMRC. Additionally, we will go over how to pay taxes in the UK and learn when tax is not due. Finally, this blog can be used as a tool to determine whether or not you will have to pay income tax or taxes related to National Insurance. 

Tax if you come to live in the UK

  • UK residents are subject to UK taxes. You are a UK resident if you spend 183 days or more in the country in one year. This also applies to UK citizens who live abroad: you must pay tax if you return to the UK for 183 days a year, even if you officially reside outside the country. 
  • Therefore, if you are a foreigner, you must pay tax if you come to live in the UK and are considered a resident under UK law. 
  • As a UK resident, your salary, pension, benefits, and income generated from your savings are all liable for taxation. 
  • Most UK residents who work in the country are subject to the National Insurance tax, which you can pay into in exchange for UK benefits and pensions. You will need a national insurance number in order to both make and receive payments and benefits. 
  • Unless you own property in the UK, as a foreigner, the most relevant tax for you will likely be income tax. The amount of money that you pay income tax on is determined by your personal allowance, which is itself based on your income bracket. 
  • The minimum personal allowance in the UK is £12,570, which means that if you make under this amount of money in one year, you will not be subject to income tax. 
  • Any income over £12,570 is subject to income tax. The percentage of tax you pay depends on your income bracket. The rates for income are as follows: 
    • 20% on income between £12,571 – £50,270
    • 40% on income between £50,271 – £150,000
    • 45% on income of +£150,000 
  • Please note that the income rates for Scottish residents may differ. 

How to pay taxes in the UK

  • The UK tax year runs from April 6th to April 5th (meaning it starts on the 6th and ends on the 5th).  Taxes from the previous year are usually due January 31st. However, depending on what type of tax you are paying, you may be able to make tax payment at different times.  
  • Most UK taxes are taken out of any relevant employment compensation, savings, and benefits. For example, if you are currently working for a UK-based employer, the income tax you owe the government will be taken from your salary prior to you receiving it. 
  • If the only income you receive is through your UK-based employment, you will not have to report your income to HMRC (because you will, in effect, have paid your taxes automatically whenever you receive a paycheck from your employer). For scenarios in which you have to self-report, see the following section.

When to report your income to HMRC

  • If you have additional sources of monies or own a business, you will likely have to submit a tax return. If you need to submit a return, you can use the Self-assessment system to do so.  
  • Untaxed income that must be reported via the Self-assessment system includes monies earned from any of the following: 
    • Commissions
    • Stocks, bonds, and other financial investments
    • Property rentals
    • Tips
    • Monies earned from abroad

UK tax for foreign income

  • If you are a foreigner residing in the UK, you will likely be taxed on any foreign income you receive.  
  • As previously mentioned, you are only considered a UK resident if you spend 183 days or more in the country in one year. Therefore, if you spend less than 183 days in the country, you are not considered a UK resident, and you therefore will not have to pay UK taxes on your foreign income. 
  • Taxes on foreign sources of income include those obtained from overseas investments,  jobs based abroad, and monies obtained from overseas pensions and property rentals (for the latter category, please note that the Isle of Man and the Channel Islands are considered “abroad” for UK tax purposes. 
  • Note when tax is not due on foreign income: if the overseas money you earned remains outside the country (i.e. does not enter the UK) and it amounts to under £2,000 (for the entire year).
  •  For example, if you rent out a property you own abroad for one week and obtain a total of £1500 in income from this property rental for the entire year, and you do not transfer that money into a British bank or bring it into the country via cash, you should not be taxed on it.  
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