A brief look at the importance of tax matters as part of a relocation and how you can make sure you do not fall foul of the tax man

If you have got caught up in the excitement of your relocation abroad, sorting out tax practicalities may find you spinning back earth with a formidable crash.

Love him or loathe him, the tax man is someone you need to keep on side before your suitcases are packed and your pounds are exchanged for euros.

Informing the tax authorities prior to making your move abroad is critical as your status as a UK resident may affect where you pay tax and the exact amount.

There are a myriad of tax schemes aimed at the expatriate market such as the offshore pension scheme QROPS.

The length of time you spend abroad and the business and other links you maintain in the UK once you are overseas may all be factors that have a bearing on your tax status.

If you plan to be overseas for a limited period of time, such as taking up a 2-year contract, and then make plans to return home, there is a good chance you won’t fall into the expatriate/non-resident category in terms of tax status.

If you are leaving the country for a year or two to take up a job and intend to return at the end of your contract, the likelihood is you are not an ex pat – and certainly not a non-resident for tax purposes.

Other factors such as whether you still have a UK residence, driver’s license or bank account may again affect your non-resident status.

Tax from worldwide income and capital gains will still need to be paid for the period in which you are still classified as a British resident and UK taxpayer, although some double taxation agreements may reduce the amount of tax paid.

For anybody who is relocating overseas, UK bank accounts will need to be closed and the status of your UK home may need to be updated.

Completing a P85 form for HMRC is the first step that needs to be made to inform authorities of your plans to become a resident in another country.

Relocation agents can offer good quality advice on all taxation matters if you are relocating overseas.