If you’re a non-resident and wondering about claiming personal allowances, we have some helpful information for you. Personal allowance for non-residents can play a significant role in determining how much income tax you need to pay. In this article, we’ll discuss the eligibility criteria for claiming personal allowances as a non-resident, as well as the thresholds and guidelines associated with this claim. Understanding these aspects can help you navigate the tax system more effectively and ensure that you’re not paying more tax than necessary. So, let’s dive in and explore how you can claim personal allowances as a non-resident.
Thresholds and Eligibility
What is a personal allowance?
A personal allowance is the amount of income that you can earn in the UK without having to pay any income tax on it. If you are eligible for a personal allowance, you will only have to pay income tax on any income you earn above that amount.
Tax on UK income for non-residents
If you are a non-resident of the UK but have income from the country, you may be liable to pay tax on that income. However, if your country has a double-taxation agreement with the UK, you can claim tax relief in the UK to avoid being taxed twice. This means that you will only have to pay tax in one country on your UK income.
Double-taxation agreements
A double-taxation agreement is an agreement between two countries to avoid taxing the same income twice. If your country has a double-taxation agreement with the UK, you can claim tax relief in the UK to avoid being taxed on your UK income. This can help to prevent double taxation and ensure that you are only taxed in one country.
Tax on the sale of UK property or land
If you are a non-resident who has sold UK property or land, you must inform HMRC within 30 days, even if there is no tax to pay. This requirement ensures that the UK government is aware of any property or land sales by non-residents and can enforce any applicable tax laws.
Personal Allowance Thresholds
Personal allowance for 2024/25
The personal allowance for the tax year 2024/25 is set at £12,570. This means that you can earn up to £12,570 in the UK without having to pay any income tax on it. This threshold is frozen until the tax year 2027/28, so it will remain the same for the next few years.
Reduced personal allowance for high earners
If you have an adjusted net income of more than £100,000, your personal allowance will be reduced. For every £2 of income above £100,000, your personal allowance will be reduced by £1. This means that if your income is £125,140 or more, you will not be eligible for any personal allowance.
Who is Eligible?
Citizens of European Economic Area (EEA) countries
If you are a citizen of a European Economic Area (EEA) country, including British passport-holders, you are eligible for personal allowance for non-residents. This means that you can earn a certain amount of UK income tax-free each year.
UK government workers
If you have worked for the UK government at any time during the tax year, you are eligible for personal allowance for non-residents. This means that you can earn a certain amount of UK income tax-free.
Double-taxation agreement
If the country you live in has a double-taxation agreement with the UK, you may be eligible for a personal allowance. Double-taxation agreements are designed to prevent the same income from being taxed twice. If your country has such an agreement with the UK, you can claim tax relief in the UK to avoid being taxed on your UK income.
Specific eligibility criteria
In addition to the above, there are specific eligibility criteria outlined in HMRC’s International Manual. These criteria include being a national of certain countries, being employed in certain capacities, and being a resident of certain countries. It is important to consult this manual or seek professional advice to determine your eligibility for a personal allowance.
HMRC’s International Manual
List of eligible individuals from specific countries
HMRC’s International Manual provides a list of which individuals are eligible for a personal allowance based on their country of origin. This list includes nationals of European Economic Area (EEA) countries, as well as individuals from other countries who meet specific criteria.
List of eligible individuals from specific countries who only have certain types of income
The International Manual also provides a list of specific countries whose citizens are eligible for UK personal allowance for non-residents but only if their income consists solely of certain types, such as dividends, interest, and royalties. This distinction is important because it means that individuals who have other types of income may not be eligible for a personal allowance.
Claiming the Personal Allowance
Completing the SA109 form
If you are required to file a self-assessment tax return, you can claim the personal allowance by completing the relevant section in the Residence, remittance basis etc supplementary pages (SA109) of the tax return. This form allows you to provide information about your eligibility for the personal allowance and calculate the amount of relief you are entitled to.
Using form R43
If you are not required to file a self-assessment tax return, you can still claim the personal allowance using form R43. This form is specifically for non-residents who are entitled to the personal allowance. It allows you to provide the necessary information to claim the allowance and submit it to HMRC.
Additional information for claiming personal allowance for non-residents
When claiming the personal allowance, it is important to provide accurate and complete information. This includes details about your eligibility, your income, and any double-taxation agreements that may apply. It is also advisable to keep records of your claim, such as copies of forms and supporting documents, in case you need to provide them in the future.