low down on income tax

The Low-Down on Income Tax in the UK for Foreigners

31/01/2023tax , Tax Issues , Taxation

Being a resident of the UK when you come from some other country has become an inclination for many these days. You must get yourself prepare for a well-planned low down on income tax if you are among those people as it takes quite much to get settled with the new requirements that will bring in. You will have to take a conscious decision after understanding income tax and other relevant liabilities, to become a resident of the UK. Coming from a different origin and becoming a resident in the UK will be a complicated process initially, this might require you a professional to make you understand the tax affairs and how HMRC is given a slim margin in this matter. If you are the one, you are on the right page and we have got you covered with everything that you need to know about the low down on income tax.

In this comprehensive guide, we have compiled facts that will help you to consider the needful before moving to the UK. Because, unlike the people who are originally from the UK and grew up here, the climate itself becomes challenging for other people who are trying to get settled. So if you come under the category of foreigners who are also making money from outside the UK, this post is the right click for you. The discussion will cover income tax, why foreigners need to pay tax in the UK, how will double taxation agreement help, and what tax you will be liable for after becoming a resident in the UK. Let us kickstart the discussion.


The Low Down on the Income Tax for People Originated from Outside the UK

When people who originated from some other country are new to the UK, the tax affairs and relevant liabilities become a confusing challenge to them. Let us take the instance of an individual who does not belong to the UK originally and can not stand the extreme weather, this makes them decide to witch the country and settle there. Now their status makes them a foreigner in the new country. So under the tax rules, a foreigner is referred to as someone who is actually earning outside of the UK origin.

Now according to the tax rules in the UK, any individual whether they are of UK origin or not is liable to pay the tax if their earnings are more than the amount of personal allowance which is £12,570. The income tax will cover the savings interest, benefits, and pension as well. Your band will depend on the amount of money you make in a certain period.


What is the Reason for Paying Taxes if You have Just Moved in?

When you originated from a different place than the UK, and you are an employee of a limited company, this will make you pay tax through the system of PAYE. In the case of being a self-employed individual in the UK, you will have to get register for self-assessment tax returns. This is because of the requirement of filing tax returns and paying income tax according to the law of tax in the UK. Many of you must be wondering about the procedure that makes you a UK resident. Well when you are in the UK and meet any of the following requirements, you will be considered an automatic resident here.

  1. You are working as a full-time employee for a period of two years or more than this in the UK.
  2. You have a home in the UK and you have stayed here for a period of one month in the UK tax year.
  3. You have stayed for a 183 days period in the UK.

Moreover, if any of the above-mentioned requirements are met, you are a resident of the UK and you will have to pay tax on any kind of income that you are earning from the UK. Also from any other country. Only then it is possible to be entitled to social benefits, pension, and health care. If you are under the category of non-resident, you will only pay tax on the income coming from the UK. Moreover, British citizenship does not come with being a UK resident.


How can a Double Taxation Agreement Help?

There is no doubt that if the tax case of a new resident is not handled well, sometimes they end up paying double tax. Because this will make them liable for paying taxes in their native country as well as in the UK. The good news here is that you have the support of a double taxation agreement in the UK with many countries. This will protect you from being taxed twice. This depends on the unique circumstance that will decide in which country you will pay the tax. This is imperative to keep yourself protected from such scenarios and take conscious decisions.


The Bottom Line

Now that you have gathered a fair amount of information about the low down on income tax, we can bring the discussion towards wrapping up. It is imperative to have a basic awareness of the income tax low down when you are in the scenario of being a new resident of the UK. Otherwise, you will have to deal with the tax liabilities in your native country as well as the UK in the future. So keep conscious awareness about the low down on income tax for your own benefit.

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