Coronavirus tax implications for UK expats
The coronavirus crisis has turned all of our lives upside down, especially due to the nationwide lockdown and heavy travel restrictions. Some expats have been compelled to return to the UK as a result of the pandemic, while others who were in the UK when lockdown hit have found themselves stranded. An enforced extension to their stay could trigger unexpected tax implications on their worldwide income.
Travel restriction and tax residence
Typically, spending 183 days or more in the UK during a tax year is an indicator of tax residence – and that makes someone liable to UK taxes on their worldwide income and gains. In the current circumstances with travel restrictions across much of the globe, this is quite a challenge.
Many countries have issued travel bans due to the outbreak, meaning many people have been forced to remain in the UK unexpectedly. Besides international travel bans, the national coronavirus lockdown which started in the UK on March 23, is likely to continue until the end of May, making expatriates and UK citizens that normally work abroad worried about their current tax implications.
Expats get a coronavirus tax break
The UK’s tax authority, HMRC, has assured expatriates and non-doms that they will not face unexpected tax bills if they find themselves stuck in Britain because of the COVID-19 outbreak. They will be able to claim ‘exceptional circumstances’ exemptions because of the virus outbreak and will not have to pay tax on their global incomes. Under the ‘exceptional circumstances‘ rule, expats and other non-residents can remain for 60 days beyond the 183-day maximum.
Exceptional circumstances
HMRC says overstaying expats will now be able to claim tax exemption in a variety of instances, including:
- Self-isolating or other quarantine measures on the advice of a medical professional.
- Obeying government advice not to travel from the UK as a result of the virus.
- Staying in the UK because international borders are closed.
- Your employer directs you to return to the UK temporarily as a result of the virus.
However, the tax authority warns that whether days spent in the UK can be disregarded due to exceptional circumstances will always depend on the facts and circumstances of each individual case.
Expats should also be prepared for changes in official guidance, as events resulting from the impact of the virus are changing rapidly and this guidance may change at short notice as situations change,” said an HMRC spokesman.
Stay safe with Pacific Prime UK
While expats stranded in the UK during coronavirus lockdown might apply for the residence tax exemptions, they should not forget the importance of private health cover in the UK, and especially coronavirus insurance cover.
As an international insurance brokerage with 20 years of experience, Pacific Prime UK is your top choice when it comes to choosing and comparing individual health insurance for expats. By working with the top international health insurance companies in the UK and worldwide, we have created long-lasting relationships that allow us to provide tailor-made insurance coverages to meet the most demanding needs and budgets of our clients. Contact us for a free quote and advice today!
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