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Hi

I am returning to the UK after 5 years in Japan and am very confused about tax.

Recently, I sent about GBP 15,000 (already taxed income) to my UK bank account. I am returning to the UK
at the start of February and therefore won't have spent 91 days in the country for this tax year.

My questions are:

Will I be liable for tax for this year?

Will I be taxed on all my savings or just the interest?


Sorry, I am very naive when it comes to financial affairs:confused2:

Thanks

Jimduck
 

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Hi

I am returning to the UK after 5 years in Japan and am very confused about tax.

Recently, I sent about GBP 15,000 (already taxed income) to my UK bank account. I am returning to the UK
at the start of February and therefore won't have spent 91 days in the country for this tax year.

My questions are:

Will I be liable for tax for this year?

Will I be taxed on all my savings or just the interest?


Sorry, I am very naive when it comes to financial affairs:confused2:
You are not ordinarily resident in UK for tax purpose in the current tax year, ending on 5th April 2010. As such, you are only taxed on income arising within UK, such as any investment or rental income. Your taxed income from Japan isn't subject to any kind of UK tax, such as income, capital gains etc., regardless of whether you keep in Japan or bring over to UK (remittance).

Now any interest (but not capital) of your £15k accrusing in the next and subsequent tax year will be subject to UK income tax, at a rate of 20%. It will automatically be taken off by your bank, unless you complete form R87 for gross payment. You can only do so if your total income, earned and unearned, is expected to be no more than your personal allowance, which is £6475 for 2010-11. When you start work in UK, you will be allocated a tax code and will start paying income tax and national insurance, but you are allowed the full personal allowance of £6475 of tax-free pay for the remainder of the current tax year.

So to answer your questions:

No, you won't be subject to any tax in UK for your £15,000 in the current tax year. You should complete form R87 and return it to your bank if the money is in any interest-bearing account (you may already have done so prior to leaving for Japan). Your bank has the right to ask the source of such remittance under the anti money laundering regulations. If asked, just tell them it's your personal savings from Japan.
Only any interest you earn from 6th April 2010 will be subject to income tax. You can shelter some of it from tax by putting it in a Cash ISA (up to £3600 in the current tax year, £5100 from next), and I strongly urge you to do so. Only UK resident can open an ISA, but as soon as you arrive back in UK, you will be deemed to be so.
 
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