UK tax for Australian expats

Tax Brief – UK tax for Australian expats

For Australians who live in the UK, the question of residency for tax purposes is a thorny issue. One of the main reasons for this is that you could be a resident of both countries.

So what exactly makes you a resident and how does that affect your taxes?

Australians, when they leave the country, will likely remain residents for tax purposes. Unless, of course, they want to leave Australia on a permanent basis (usually for two years or more).

Where it gets complicated is that practically anyone who works in the UK for more than 183 days will be considered a UK resident. To further complicate the issue at hand, is that an Australian who works less than 183 days in the UK could also qualify as a resident if they have sufficient ties with the UK.

The term resident is, unhelpfully, defined as a UK employee who meets any of the requirements of the automatic resident’s test, and none of the automatic overseas residence test.

Residents of the United Kingdom are taxed on both their worldwide income, as well as their UK-based income. Non-residents, on the other hand, are only taxed on their UK-based income. Furthermore, individuals who don’t have a permanent home in the United Kingdom but are employees in the UK may be in a different tax bracket to residents.

The good news is that if by any chance you end up being resident of both countries then, according to the tax treaty between Australia and the United Kingdom, residents will only be considered resident of:

  • The country in which they have a permanent home
  • The country in which their ties (personal and economic) are closer
  • The country they have a passport for

In other words, while the UK and Australia have a tax treaty, navigating the tax world in the United Kingdom is slightly more complicated than in other countries. As such, Australians moving to the United Kingdom may want to speak to an expert to get their affairs in order.

Do you need more advice on navigating your tax status as an Australian expat in the UK? Then get in touch with us at Expat Tax Services. We handle expat tax returns Australia wide and globally.

Shane Macfarlane
Follow me

Shane Macfarlane

CEO & Founder at Expat Tax Services
Shane's an Australian Chartered Accountant and Australian expat tax specialist who's also an expat himself (based in Asia).Shane's passionate about tax and legitimate tax minimisation, particularly as it relates to Australian expats who are often subject to high rates of tax back home in Australia.Beyond tax and accounting, Shane's an entrepreneur, having devised, created and founded a successful accounting startup, Fifo Workpapers (acquired by accounting software giant, Intuit inc. in 2013)

In short Shane's a tax and software techno-geek, who recognised that Australian expats were unable to obtain the specialist advice and quality service, that they needed from their accountants. Accordingly, Shane founded Expat Tax Services to provide Australian expats with access to specialist, quality advice at fair and reasonable prices (no hourly rates, fees quoted upfront with unlimited support included) . . . receive the support and advice you need without having to take second-mortgage to pay your accountant's bill! Speak to Shane & the team today.
Shane Macfarlane
Follow me

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.