We are sharing this update from ACCA, our professional body, for the interest of clients and contacts. The content is (c) ACCA
Guidance around thresholds and eligibility to Personal Allowances for Non Residents
- rental income
- savings interest
- wages.
If you’re eligible for a personal allowance you pay income tax on your income above that amount. Otherwise, you pay tax on all of your income.
The country where you live might tax you on your UK income. If it has a ‘double-taxation agreement’ with the UK, you can claim tax relief in the UK to avoid being taxed twice.
You do not normally pay tax when you sell an asset apart from on UK property or land. Non-residents who have sold UK land or property must tell HMRC within 60 days, even if there is no tax to pay.
Personal allowance thresholds
The personal allowance for 2022/23 is £12,570 which is frozen until 2027/28. An individual with adjusted net income of more than £100,000 has the personal allowance reduced by £1 for every £2 of income above £100,000, rounding up the remaining allowance to the nearest pound.
This means that for 2023/24 an individual:
- has a 60% effective marginal rate of income tax on income between £100,000 and £125,140
- has no personal allowance if the individual’s income is £125,140 or more.
Who is eligible?
You’ll get a personal allowance of tax-free UK income each year if either:
- you’re a citizen of a European Economic Area (EEA) country – including British passport-holders
- you’ve worked for the UK government at any time during that tax year.
You might also get it if it’s included in the double-taxation agreement between the UK and the country you live in.
HMRC’s international manual INTM334580 clarifies it further as below:
An individual may claim UK tax allowances if they are any one of the following:
- a national of a state within the European Economic Area (EEA), including UK citizens, that is Austria, Belgium, Bulgaria, Croatia*, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Netherlands, Norway, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, United Kingdom (*Croatia joined EEA 2013, but entitled to PA if National and Resident prior to new treaty)
- is or has been employed in the service of the British Crown
- is employed in the service of any UK missionary society
- is employed in the service of any state under the protection of His Majesty
- is resident in the Isle of Man or the Channel Islands
- has previously resided in the UK and is resident abroad for the sake of their health or the health of a member of their family living with them
- is a widow, widower or surviving civil partner whose late spouse or civil partner was employed in the service of the British Crown
- is a national of Israel and Jamaica
- s a national who is also a resident of Argentina, (no relief for 2002/03 and later years), Australia, Azerbaijan, Bangladesh, Belarus, Bolivia, Bosnia and Herzegovina, Botswana, Canada, Côte d’Ivoire (Ivory Coast), Egypt, Gambia, India, Indonesia, Japan, Jordan, Kazakhstan, Korea (no relief for 2002/03 and later years), Lesotho, Malaysia, Montenegro, Morocco, New Zealand, Nigeria, Oman, Pakistan, Papua New Guinea, Philippines, Russian Federation, Serbia, South Africa, Sri Lanka, Sudan, Switzerland, Taiwan, Thailand, Trinidad & Tobago, Tunisia, Turkey, Turkmenistan, Uganda, Ukraine, Uzbekistan, Venezuela, Vietnam, Federal Republic of Yugoslavia, Zimbabwe or
- is a resident of Austria, Barbados, Belgium, Fiji, Greece, Ireland, Kenya, Luxembourg, Mauritius, Myanmar (Burma), Namibia, Netherlands, Portugal, Swaziland, Switzerland, Sweden (up to April 2016 only) and Zambia.
If the individual is a resident but not a national of Austria, Belgium, Kenya, Luxembourg, Mauritius, Netherlands, Portugal, Sweden (up to April 2016 only), or Zambia they are not entitled to allowances if his/her income consists solely of dividends, interest and royalties (or any combination of them).
Claim the personal allowance
A non-UK resident entitled to the personal allowance must either:
- complete the relevant section in the Residence, remittance basis etc supplementary pages (SA109) of the self-assessment tax return; or
- if not required to complete a self-assessment tax return make a claim using form R43.