Non Residence & Personal Allowance

It is always important to check if a non-resident is able to claim the personal allowance (PA).

Firstly, if you are a British citizen or a national of any of the EEA states, you are entitled to the allowance.

Furthermore, the following gives more (less common) circumstances entitling them to PA:

1. You are resident in the Isle of Man or the Channel Islands
2. You have previously resided in the United Kingdom and are resident abroad for the sake of your health, or the health of a member of your family who is resident with you.
3. You are or have been employed in the service of the British Crown.
4. You are employed in the service of any territory under His Majesty’s protection.
5. You are employed in the service of a missionary society.
6. You are a widow, widower or surviving civil partner whose late husband, wife or civil partner was employed in the service of the British Crown.

Finally, a double tax treaty with the country of residence may grant PA, normally subject to conditions. For a comprehensive list, HMRC publish a document called “Digest of Double Tax Treaties” (Digest of Double Taxation Treaties April 2018)

So, having decided that PA is due, the next check should be the possible restriction of the allowance with reference to UK income levels. This applies to income over £100,000. The amount due is restricted by £1 for every £2 you are over the limit. The allowance will completely phase out when the UK income is £125,140 or more.

Strictly the law provides that the allowance must be physically claimed. The requirement to make such a claim is restricted to non-residents wishing to claim. Asking all UK residents to claim the allowance would be an enormous task, so it is granted automatically.

Where rare circumstances dictate, it is possible to disclaim the PA. Further advice should be sought if you think this may be the case. One example would be in connection with EIS, where the payment of income tax effects the availability of other reliefs.

Subject to the circumstances, the PA can be claimed on form R43. R43(Manual)

If this is not possible, the allowance should be claimed on the tax return.

This is done on the Residence pages (SA109). Boxes 15, 16 and 17 should be completed as appropriate. The country codes are included on the help sheet to completing the SA109. Residence, remittance basis etc notes

For more information, please contact us at: consultancy@vantagefeeprotect.com

John Riseborough
Tax Advisor