COVID-19 is having a potential unforeseen tax consequence on expats whose travel plans are disrupted as government close borders and impose self-isolation periods. The travel bans could have an impact on where expats pay tax. Many expats are concerned that if they are forced to alter their travel plans due to the coronavirus pandemic, they could become tax resident in a country which will tax them at higher rates. Some countries have safety valves to ease the stress for expats, like ignoring residency rules due to exceptional circumstances brought about by COVID-19. Others have allowed periods of grace for filing tax returns. HM Revenue & Customs understands that COVID-19 affects the travel plans of British expats and other non-residents and has resulted in many people spending more time in the UK than they had planned. New guidance clarifies that expats can disregard extra stays of up to 60 days if:
• A health professional orders you to self-isolate in the UK due to coronavirus
• Government advice stops you leaving the UK
• You cannot leave the UK due to the closure of international borders.
• Your employer asks you to temporarily return to the UK due to coronavirus.
These reasons are in addition to the normal exceptional circumstances allowed by HMRC, which are:
• Local or national emergencies
• Natural disasters
• War
• An unexpected life-threatening illness or injury to yourself, your spouse or dependent child
Past performance is not a reliable guide to the future. The value of investments and the income from them can go down as well as up. The value of tax reliefs depend upon individual circumstances and tax rules may change. The FCA does not regulate tax advice. This newsletter is provided strictly for general consideration only and is based on our understanding of law and HM Revenue & Customs practice as of February 2021 and the contents of the Finance Bill. No action must be taken or refrained from based on its contents alone. Accordingly, no responsibility can be assumed for any loss occasioned in connection with the content hereof and any such action or inaction. Professional advice is necessary for every case.