UK Tax Year End: Checklist for international individuals – 2021/22

Income tax

• Ensure you fully utilise available personal tax-free allowances (for example, personal allowance of £12,570, dividend allowance of £2,000), and your lower rate tax bands (applicable for you and your spouse), and plan to ensure the same for the coming tax year. 
• Maximise marginal rate tax relief on annual pension contributions.
  
  Depending on your income levels, tax relief can be claimed on contributions up to £40,000 per year. This amount is reduced for individuals with higher income, with a lower limit of £4,000 per year. It is however possible to claim relief for any unused element of the annual limit for the three previous tax years.
• Ensure higher rate tax relief is claimed on charitable donations made under Gift Aid via your tax return.
• Consider making tax efficient investments (if appropriate, given your overall investment strategy*).
  
  For example:
  - Individual savings account (ISA)
  - Enterprise investment scheme (EIS)
  - Venture capital trust (VCT)
  - Seed enterprise investment scheme (SEIS)
  - Investors relief (IR)
  - Social investment tax relief (SITR)
  
  * The above investments offer tax relief in various forms (tax-free investment returns, income tax relief on the amount invested, capital gains tax relief / deferral) but there are risks associated with the capital invested and these investments should only be made following consultation with your independent financial adviser and tax adviser.

Captial gains tax

• Utilize your annual exempt amount (£12,300), and your lower rate tax bands where available by selling investments standing at a gain. Applicable for you and your spouse.
  
  Where you would like to retain these assets in the family in the longer term, consider other ways to trigger a disposal for tax purposes, for example, making gifts to children, transferring investments to a trust (advice should be sought on other tax/legal implications of making such gifts/transfers).
• Consider deferring disposals on assets standing at a gain until after 5 April 2022 to defer the tax payment date in relation to the gain (subject to consideration of commercial implications of deferring the disposal). 
• Be aware of scenarios where a UK capital gains reporting / filing requirement exists for disposals by non-UK tax residents.

Inheritance tax

• Utilize annual inheritance tax-free gift allowances*
  
  For example:
  - Annual allowance – £3,000 per year (can use prior year’s allowance too if unused)
  - Small gifts allowance – £250 per donee,
  - Gifts made in consideration of marriage – £5,000 to children, £2,500 to grandchildren, and £1,000 to anyone else
  - Gifts out of income – there is no cap on the amount of tax-free gifts that can be made from your annual income providing that the gifts are regular and do not diminish your normal lifestyle and are appropriately documented
  
  *Where recipients are resident outside the UK, tax treatment of the gift for the recipient should be confirmed.
• Review the application of relief expected to apply to future transfers of certain assets i.e. Business Property and Agricultural Property to ensure that the conditions for relief would still be met / take remediation actions where conditions are not currently met.
• Review any Wills and Power of Attorney provisions that you have in place to confirm that they remain appropriate and effective. 

Leaving the UK in the current tax year

Where you intend to leave the UK in the current tax year and be non-UK resident in the following tax year, plan and implement this properly to ensure i) UK tax residence ceases from the desired date and ii) you do not inadvertently resume UK tax residence in a future year. 

• Assess UK tax residence position in advance to understand what practical steps may be required to become and remain non-UK tax resident.
• Understand liability to tax and filing requirements as a non-UK tax resident (for example, you may be required to continue to file UK tax returns, you will continue to be liable to UK tax on income and gains from UK real estate etc).
• Notify HMRC that you have left the UK.
• Confirm tax residence position for new country of residence. 

Non-UK tax residents

• Review your facts for 2021/22 so far, and plans for the remainder of the tax year, in view of the Statutory Residence Test to confirm that you will be non-UK resident as expected.
• Consider the impact of an unexpected extended stay in a particular country (e.g. as a result of the pandemic) and assess whether this will impact your tax residence position.
• Where this review indicates that you may inadvertently be UK tax resident for the current year, consider whether you can take any action prior to the end of the UK tax year to ensure non-UK tax residence. For example, limit your time spent in the UK before 5 April 2022.
• Review your facts in view of the tax residence rules in your country of tax residence and in countries in which you regularly spend time and / or with which you have significant ties. Do this to ensure you are aware of which countries you are a tax resident, and that you can comply with your tax payment and filing obligations in that country (those countries).
• For dual resident individuals relying on a double tax treaty awarding treaty residence to a particular country under the tie-breaker provisions, review your facts in view of the tie breaker provisions and confirm which country treaty residence will be awarded to.

Becoming UK tax resident for the coming tax year

• Where you plan to become UK tax resident per the Statutory Residence Test for 2022/23, consider taking actions prior to the start of the tax year to optimize your UK tax exposure from 6 April 2022 (subject to professional advice).
  
  For example:
  - ring-fencing clean capital*
  - segregation of funds on an ongoing basis, including use of credit cards and loans*
  - realising capital gains and “rebasing” of assets
  - remitting foreign income and capital gains to the UK*
  - realising foreign income
  
  *Non-UK domiciled individuals only

• Consider the date from which you will become UK tax resident i.e. 6 April 2022 vs another date during the tax year (where split year treatment applies).
• Review treaty residence position under any relevant double tax treaty where you will continue to be tax resident in another jurisdiction in addition to the UK.
• Consider impact of “temporary non-residence” rules where you have been UK tax resident historically.
• Registration with / notification to HMRC (UK tax authority).
• Share details with your banks / wealth managers etc. before the calendar year end in order to ensure your details are correct for CRS reporting purposes.

 Non-UK domiciled individuals

• Review your domicile status and confirm that your intentions have not changed.
• Plan to make the most of any claim for the remittance basis of taxation to apply, especially where the remittance basis charge (RBC) will be payable.
  
  For example, if it is likely that the remittance basis will be claimed and the RBC paid for the current tax year (2021/22) but unlikely to be paid in future years, consider if additional non-UK income / capital gains can be realized prior to 5 April 2022 that will also be protected.
  
• Review and confirm when you will become “deemed domiciled” in the UK.
• Where you will become deemed domiciled in the UK from
  6 April 2022, consider undertaking planning beforehand (subject to professional advice).
  
  For example:
  - Where non-UK assets are held directly, consider transferring those assets to a non-UK trust structure
  - Arrange segregation of funds within non-UK bank accounts to ensure that any income and / or capital gains that will be taxable in the UK from 6 April 2022 can be freely remitted to the UK and spent without triggering additional taxable remittances
  - Where assets are already held in a non-UK trust structure, review loans to the Trustees and / or underlying companies to ensure that the beneficial UK tax treatment of income and gains within the structure continues from 6 April 2022 (and that the structure is not “tainted”).

Offshore asset holding structures

• Where it is considered that certain non-UK asset-holding structures benefit from commercial / motive defences to anti-avoidance legislation, the applicability and relevance of such defences should be reviewed and confirmed considering transactions / events that may have taken place during the current tax year.
• Non-UK resident trustees with UK resident beneficiaries should ensure records of relevant income and / or “stockpiled gains” during the tax year are up to date in anticipation of future distributions / benefits from the trust.

UK real estate

• Be aware of the taxation and filing requirements for UK real estate owners given the many changes in recent years (especially for non-UK resident owners).
  
  For example:
  - ATED returns – 30 April annual deadline
  - Notify HMRC of certain disposals of UK real estate – filing and payment deadline 60 days from completion
  - Registration by Non-Resident Landlords to receive rents gross, and annual reporting of rental income
  - Inheritance tax returns and payments, for lifetime and death events (deadlines and filings required depend on the nature of the charge).

Change in personal situation

• Consider the tax and legal impact of any changes in your personal circumstances (for example, marriage, re-marriage, Civil partnership, separation, divorce, incapacity of spouse/ civil partner or becoming not resident or not domiciled).

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