Covid-19 is impacting everybody in one way or another, including those who were not expecting to be UK tax residents but now find themselves unable to leave the country.
City A.M. asks Helen Jones, a tax partner at BDO, the key questions that need answering for those stuck in Britain during the pandemic.
What residency issues are people facing?
I am aware of a number of non-UK residents, who planned to stay in the UK for a short period but are worried because they have had to unexpectedly remain in the UK.
Typically, this has been because either their home country has closed down its borders, an employer has forced them to remain or personal circumstances have made it difficult to depart. HMRC’s new “exceptional circumstance”, published last week, is a very welcome boost.
However, as things stand, it currently only allows an additional 60 days in the UK. While this relief is useful from a day count perspective, there are complexities, and so expert advice should be sought.
On tax, what steps should those impacted take?
First, remember that your days in the UK are generally by reference to the tax year. Keep track of how many days you have been in the UK for the current tax year to see if you are over the allowance.
If you are in breach of the day count, you have an extra 60 days assuming you qualify for this relief. Collate as much evidence as you can to substantiate your whereabouts and the circumstances that made you stay in the UK.
You will need to disclose details on your tax return and you may need proof that you fall into the categories HMRC published.
We may find that HMRC take a light touch approach, but it is better to be prepared. It is also important to consider what you should do about the coming tax year, starting on 6 April.
What constitutes an exceptional circumstance?
HMRC has confirmed that additional days spent in the UK will be deemed by reason of an exceptional circumstance if you are quarantined or advised by a health professional or public health guidance to self-isolate in the UK as a result of the virus, or if you find yourself advised by the government not to leave the country.
Extra days will also be given if you are unable to leave the UK as a result of the closure of international borders, or you are asked by your employer to return to the UK temporarily as a result of the virus.
You should remain mindful that HMRC will still take a dim view on those perceived to be abusing their tax rules, so only follow the fresh guidance if you are sure you comply.
What other issues are expats facing?
With many investments depreciating in value, some pensioners are seeing their reserves diminish quite substantially.
Whereas people who are actively working or investing may feel confident about building up their capital again through earnings or reinvestment, those who have worked for a healthy retirement pot may be concerned about how long their resources will last.
Helen Jones is a tax partner at accountancy and business advisory firm BDO.