have the biggest impact on your finances, so it can pay to start planning well in advance of a move. If you are considering a move home, consider if it is the right time to move back home as preparation is key. One of the top priorities is tax.
When Simon Cahill, a chartered financial planner at Octopus Wealth, moved back to the UK in 2020 having spent four years in Dubai and a year travelling, colleagues and friends pestered him for advice about the process. He decided to write a guide on how to overcome the main hurdles, interviewing 30 former British expats who had lived in the UAE. “The most common mistake people made was not planning enough in advance,” he says, explaining that one person was hit with a £32,000 tax bill that he could have avoided with a deferral of his return. First, you should work out how much tax you must pay on your return to the UK. This can depend on how much time you have spent living overseas. As soon as you have become a non-resident of the UK for tax purposes, you will not have to pay dividend tax or capital gains tax on any of your UK assets. However, under the so-called “temporary residence rules”, if you have lived abroad for less than five years, any tax savings you have made on UK dividends or capital gains since you left would have to be paid to the exchequer on your return. “The temporary residence rules are designed to stop people from going away for a short period of time to incur tax-free capital gains,” says Tim Stovold, partner at accountancy firm Moore Kingston Smith.
The other timing consideration is the moment in the tax year at which you choose to move back. If you can time the move so you arrive on or shortly after April 6, the beginning of the UK tax year, that will save you the possibility of having to complete a “split year” tax return, the rules of which are fiddly and horrible. The split year rules allow you to have only UK tax liabilities from the date you move back, rather than from the whole tax year of your return. But they will only apply if certain conditions are met, relating to working days, property ownership and a partner’s working patterns.
It is best to sort out any assets If you have any assets to sell, including stocks and property, it usually pays to plan this carefully before leaving. Experts suggest that if you have any stocks listed in a low tax jurisdiction, you might want to consider selling them and coming back to the UK with cash, to prevent you having to pay UK taxes on profits accrued abroad.
