A Taxing Life Abroad - Put Simply
In this weeks stream I revealed hidden tax responsibilities, possible traps, and the most effective strategies for dealing with your overseas tax liabilities.
UK tax 2023/24 Self Assessment
Self assessed tax payment on account are due in July for income arising in the UK for expats.
If an expats sells UK property then a Capital Gains tax return is due within 60 days for any tax to pay.
All other UK Capital gains must be reported by 31st December each year.
Then a full year UK tax return is due at the 5th April.
So any expat with a UK Capital Gains Event between 6th April 2022 and 5th April 2023 has a UK non resident self assessed tax return to do.
UK Government Service Pension Tax
UK Government service pensions will always be taxed in the UK going forward subject to introduction and revision of double taxation treaties.
For Cyprus this applies from April 2024 for all.
The good news is this allows expats to enjoy a UK personal allowance of over £12500 saving £2500 UK tax at 20%.
Meanwhile this government service pension, taxed at source in the UK is then not reportable in an expat country of residence.
This means that the local personal allowance can still be used and the total income taxed overseas is reduced.
To update your tax registrations to maximise use of allowance and tax savings contact us.
UK state pensions are only indexed to increase by inflation in April each year if the expat is tax resident in, European Economic area (EEA), Switzerland, Gibraltar or other countries with a reciprocal social insurance agreement.
Expats must choose their country of tax residence for whole year, even if splitting time between different locations. You cannot change your country of tax residence for state pension during a year.
If the expat has a UK state pension that has not been indexed while Living and Working Abroad , then on returning to the UK they can have their pension updated to the equivalent current rate of UK pension.
If receiving a state pension expats should report any change in your family situation including:
relocating abroad or back to UK
entering care or going to prison
getting married or divorced or widowed
if you or your spouse start have any other social security benefit changes
If you do not report any changes of circumstances or give wrong information then any overpaid pension will be reclaimed from you.
Cyprus Tax Self Assessment
Cyprus tax resident only have to pay self assessed tax if they have taxable income.
This is of essence to expats.
Cyprus Source Salary, pension, dividend and interest is excluded from this requirement.
Expats with salary, income, pensions, dividend and interest from overseas have taxable income they should declare under self assessment as should any company with taxable income and not dormant.
Self assessed tax in Cyprus is due In July and December but could be paid within a month without being overdue.
While the tax payment portal is open (eg July August) tax can be paid online by card or bank transfer, but other times only by bank transfer only and penalties may apply for late payments.
Self assessments should be submitted in July to create the self assessed tax due for July and December with 50% due in each period.
If the estimated tax is below 75% of the final tax bill, penalties may be added.
Once the self assessed portal closes any balance can only be paid following the full tax year return by 1st August the following year, 2024 for 2023 income.
For 2022 full Cyprus returns, the portal opened late. Returns are due from mid July 2023 and then tax due balances can be paid by end of September or 2/10/2023.
It is best to estimate self assessed income now, it can be revised before the end of December without penalty.
Contact us if you need help with your tax returns & registrations.
