Proving to the UK tax man that you are an expat

Moving overseas to remove yourself from the UK tax system involves a lot more than packing your bag and getting on a boat or plane.

HM Revenue and Customs has a long reach, so you need to be absolutely sure you have done everything you can to show you no longer have any connection with the UK when you leave for your new home.

Even when you have left and HMRC confirms you are not liable to UK income tax, some nasty little tax traps can still be sprung.

• If you sell property, stocks, shares or other assets that trigger a capital gains tax charge, you could be liable for all the tax due if you return to the UK within five years of leaving
• The millstone of inheritance tax remain hanging around your neck for three years after leaving the UK
• National Insurance liability can last up to a year after you have left the UK

Becoming an expat is not quite as easy as it may seem at first - but here are some tips of how to prove to the taxman that you have broken links with the UK for good:

Tax

• File forms P85 with HMRC to tell them you are non-resident.
• Try not to return to the UK for an entire tax year to emphasise the break in residence - for instance if you leave the UK in December 2008, don’t come back until after April 6, 2011.
• Do not return to the UK for more than 90 days a year after the first full tax year away.

Finance

• Cancel your UK credit cards and reduce the balances in your UK bank accounts.
• Consider transferring your pension in to a QROPS - if HMRC agrees you can transfer funds in to a QROPS, then they are agreeing you are a non -resident because UK residents cannot invest in an overseas pension.

Property

One of the keys is not to maintain a home in the UK so the taxman cannot claim you are only away temporarily and not really an expat.

• Sell your UK property after you have left the UK or let it out for at least 12 months.
• Do not leave your property empty so the tax man can claim you have a home here.