If you are the one who is also planning to move to the UK, you need to gather the basic information about the basic of the low down on income tax and how is it implemented in the UK. Before getting into the lengthy details, it is imperative to mention here that tax affairs have a very slim margin in the UK and the ruling on tax matters is also very strict here. So if you are an individual who is moved recently or you originated from another country outside the UK, this guide will be helpful to bring some important factors to your knowledge.
Let us take the instance of an individual who is born in the UK and is raised here too. However, the gloomy weather of the UK is quite a challenge for several people who are residing and even have got brought up here. If you no longer can stand it and book your one-way ticket to another country, you will be considered a foreigner in the other country you are moving to. Such residents of the UK who are from overseas are considered to be ex-pats. So considering someone as a foreigner means that the person has some earning sources from a country that is different from the country they belong to. Let us get further delved into the discussion to gather relevant facts on this matter.
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Do Foreigners Pay Income Tax in the UK?
If you are residing in the UK or you have just moved in here, this is s basic tax fact that every single person who is earning more than the limit of the personal allowance in the UK has to pay the tax that they owe to HMRC. The amount of personal allowance is £12,570 in the current tax year. This tax is basically known to be the income tax and it covers the amount from the savings interest, other benefits, and pension.
Now the question that might arise here is how much you will have to pay in the form of income tax. Well, this depends on the amount you are learning that will help to decide the amount you owe to HMRC or the income tax. However, normally there are three bands that are applicable according to the amount of your salary.
This explains that if you are earning a figure amount between the range £12,571 to £50,270, you will have to pay the basic rate of tax which is 20 percent. If you are one who is earning between the range of figure £50,271 to £125,140, you will have to pay the higher tax rate which is 40 percent. And lastly, if you are earning more than the figure £125,141, you will have to pay the additional rate of tax which is 45 percent.
Just Moved to the UK – How Do You Pay Income Tax?
We will take the instance of the individual who has just moved into the UK and is new to the tax facts and how tax affairs are handled here. Suppose that the individual is also employed by a UK-based company. The tax you will have to pay is deducted through the PAYE system and deducted from your salary even before you receive it.
On the other hand, if the individual is just moved into the UK but belongs to the self-employment and offers their services or products in the UK, the first thing they need to do is to get the registration process completed for the self-assessment. This will help to file the tax returns to fulfil the requirements of paying income tax.
Can Anyone Become a UK Resident?
There are certain conditions on the ruling of becoming a UK resident. If you have met any single one of the following requirements, you will also be considered a UK resident.
- You have offered full-time services in the UK for a period of more than two tax years.
- You have a main house in the UK and you have lived in your main house for at least a duration of one month in a tax year.
- You have lived in the UK for at least a duration of 183 days.
Moreover, if you find yourself in a position where you are meeting any one of the above-mentioned conditions, you are a UK president and you will have to pay income tax on the sources of income from the UK and even on the earnings that you are getting from foreign sources. Once you are considered to have a resident of the UK, you can enjoy the benefits like pension, healthcare, and other social benefits.
In the case of being a non-resident, you will have to pay the income tax on the income that is coming from UK bases sources and not on foreign sources of income. This is also imperative to mention here that UK residency will not offer you British citizenship automatically.
Will you be Double Taxed if you Move to the UK?
There are possible high chances of getting double-taxed if you do not handle the matter efficiently. This happens mostly when a native from another country moved to the UK. The risk of being double taxed gets in higher in such cases. However, here comes the role of the double taxation agreement, that the UK has with several countries. This is to protect the people who are settled in the UK from another country to pay the tax twice. Now all the agreements will depend on the unique cases and the fact of which country you belong to.
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. There are certain conditions that are to be followed to handle tax matters efficiently in the UK and to protect yourself from paying the tax twice in one tax year. We hope these few minutes of reading will help you to develop a better understanding of how the low down on income tax works in the UK for foreigners who are just moved in.
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Disclaimer: The information about the low down on income tax in the UK provided in this blog includes text and graphics of general nature. It does not intend to disregard any of the professional advice.