Coronavirus tax bill: Are returning expats facing huge tax bills amid COVID-19 crisis?

Coronavirus has prompted expatriates and non-residents to find them unexpectedly stuck int the UK meaning they may be liable for UK income tax. has compiled a guide about how these taxes work and whether they apply to those in the UK throughout the coronavirus outbreak.

What taxes do you pay if you return to the UK?

If you return to the UK after living abroad, you will be classed as a UK citizen once again which means you have to pay tax.

Upon your return, you will have to pay tax on:

  • Your UK income and gains
  • Any foreign income and gains, although you may not have to if your permanent home remains outside the UK.


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What to do once you return to the UK?

Upon your return from abroad, you may need to register for Self Assessment if you begin working for yourself or have other income or gains from the UK or abroad.

However, you do not need to register if you are an employee and do not have any other untaxed income to report.

If you return to the UK within five years of moving abroad, you may have to pay tax on certain income or gains made while you were a non-resident.

These rules apply if both of the following are true:

You returned to the UK within five years of moving abroad, or five full tax years if you left the UK before April 6, 2013.

You were a UK resident in at least four of the seven tax years before you moved abroad.

You can find out more by completing a Self Assessment here.

How does the coronavirus pandemic impact British expatriates in the UK?

According to accountancy group UHY Hacker Young, British expats and non-residents stuck in the UK due to COVID-19 lockdowns may be hit “by major unexpected and heavy tax bills”.

The company has said non-residents could be forced to breach the maximum number of days they are permitted to spend in the UK to retain their non-resident status.

This means the HMRC may charge them UK tax for their worldwide income.

Under the current rules, non-residents can send between 16 and 183 days in the country before they begin paying tax.

HMRC grants each non-resident an additional 60 days for exceptional circumstances; such as births, deaths, sudden and life-threatening illness or injury, which can be used throughout the tax year.

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HM Revenue and Customs has issued advice to British expatriates stranded in the UK due to coronavirus.

The tax authority has provided special guidance for expatriates who face risking their non-residence tax status due to being stuck in the UK longer than anticipated.

Many countries have issued travel bans due to the outbreak, meaning many people have been forced to remain in the UK unexpectedly.

Now HMRC has said expats and non-doms who find themselves forced to stay in the UK beyond the 183 days will be able to claim “‘exceptional circumstances” exemptions because of the virus outbreak and will not have to pay tax on their global incomes.

Kreston Reeve senior manager Stephen Metcalf told the FT: “Each country has its own set of rules to determine your tax resident status, with a common feature being a measure of the number of days spent in that country.

“The UK has the statutory residence test, in which the number of days that an individual is allowed t spend in the UK without becoming resident is affected by various factors, including work, home and family locations.

“The best way you can avoid a UK tax bill will be to limit the number of days sent in the country to avoid becoming a UK tax resident.

“In the current circumstance,s with travel restrictions across much of the globe, this is quite a challenge.

“The UK residence test does allow for individuals to spend up to 60 additional days in the UK in “exceptional circumstances”, although that bar is set very high.

Despite these rules, experts have warned tax residents in the UK and US may be at risk.

Even if you lose your US tax residence status, you may be liable to continue paying tax in the US as a US citizen.

This means, you will need to consider the double tax treaty between the UK and US, which may offer some tax relief.

Double taxation could cause significant issues for businesses, particularly amid the pandemic, particularly as processing claims and issuing refunds can take a lot of time amid the coronavirus outbreak.

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