Expatriate tax ebook - United Kingdom

What taxes?

Capital gains tax
Inheritance, estate and gift taxes
Investment income
Local taxes
Real estate taxes 
Social security taxes  
Stock options 
Wealth taxes 
Other specific taxes

Capital gains tax
Capital gains tax is separately charged on all residents. From 23 June 2010, the rate is 18% for basic rate taxpayers, or 28% for higher rate taxpayers. (18% applies to gains realised before 23 June 2010).

An Annual Exemption may also be available (£10,600 in 2011/12) but this is not available to those excluding over £2,000 from UK tax under the remittance basis.

There is a relief for entrepreneurs for the first £10m of gains at 10% (£5 million for gains realised after 22 June 2010 and before 6 April 2011, £2 million for gains realised before 23 June 2010).

There are a number of exemptions available, such as the main residence exemption for an individual's principle private residence.

Gains on foreign assets may be taxed on a remittance basis for expatriates.

Inheritance, estate & gift taxes
The UK charges inheritance tax on some lifetime gifts and on death. The rules are very complex as there are a range of exemptions and relief's.

Expatriates are usually taxed only on assets located in the UK.

Investment income
All investment income is taxed at normal income tax rates but the tax treatment of dividends is complex. Rates differ depending upon whether the dividends are UK or foreign dividends.

Expatriates on the remittance basis will only pay tax to the extent the income is remitted to the UK.

There are some tax exempt savings available in the UK.

Local taxes
Local taxes do not exist at this time.

Real estate tax
Living accommodation is subject to a council tax. This is charged per property regardless of the income of the occupants.

Social security taxes
The rates for social security vary. From 6 April 2011 employees pay social security at 12% on approximately £40,000, and 2% on any excess. Employers pay 13.8% without cap.

Stock options
Stock option income specifically, and all income derived from securities, is taxed in the UK.

Wealth tax
There are no wealth taxes other than Inheritance Tax.

Other specific taxes
Other specific taxes do not apply in the UK.

Information about UK:

• introduction 
• facts and figures
• basis of taxation
• what taxes?
• tax planning opportunities