Cross-Border Lockdown Living – Expat Tax Planning

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Cross-Border Lockdown Living- Expat Tax
Planning
For the many expats who share their time between
the UK and overseas, the extensive global travel
restrictions in place due to lockdown legislation
presents a unique challenge.
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Lockdown Travel
Not all travel is prohibited, but with quarantine
procedures in place across the globe and very
limited travel availability, there are expats
around the world who have found themselves unable
to return to their country of origin. Many
countries are advising against any
non-essential travel movements, and it may be
that some expats are unable to travel to their
nearest airport, or secure a flight to their
destination from that airport due to flight
operators grounding aircraft. Some national
borders are closed entirely, making it impossible
to leave or enter. This applies to 1. Expats
who had been visiting their country of origin
when travel restrictions were imposed. 2. Expats
living abroad who are unable to return to their
country of origin. 3. Non-residents who are
unable to return home. These circumstances have
wider implications than the stress of being
unable to move, and our team are working closely
to understand the best strategies to combat those
implications, and how to be proactive in seeking
exemptions in this unforeseeable circumstance.
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What are the Tax Implications of Covid-19 for
Expats?
The challenge in this scenario is that there is
no way of knowing when exactly these travel
restrictions will change. This makes it
impossible for expats to plan travel accordingly,
particularly because most countries intend on
easing restrictions in a staggered process. This
impacts tax in a variety of ways 1. Changes to
residency status 2. Exceeding maximum stay
requirements 3. Being classified as a tax
resident 4. Inability to return to the country of
origin in line with visa requirements 5. Exposure
to rising tax rates Any of these situations
could arise where expats are prevented from
travel due to lockdown measures. The specific
scenario will vary between countries, as each has
different regulations and requirements that
impact the tax status and residency category of
expats. HMRC has also launched a crackdown on
undeclared expat tax liabilities, as the drive to
ramp up income increases in urgency as the true
cost of the pandemic becomes clearer.
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Government Advice for UK Expats
For UK expats, the government is publishing
advice and updates about how to manage the
situation. The priority is to secure your safety
and wellbeing, and so this guidance suggests
measures such as Checking your travel
insurance  if this is due to expire, or has
clauses about maximum stays contact your
insurance provider quickly. The pandemic is a new
and uncertain scenario, and thus most service
providers are offering emergency services and
extensions to ensure that you are
covered. Secure accommodation  for expats using
temporary housing, rented accommodation or a
timeshare, this may present the challenge of
needing to find somewhere else to stay until you
can move forward with travel plans. If you are
stuck abroad and struggling with accommodation,
you can contact your local embassy or consulate
for support. Financial support  there are
various systems in place to provide financial
assistance in these unusual times. This includes
mortgage holidays and interest holidays, which
might help avoid ramping up additional expenses
whilst incurring extra costs to remain
abroad. Other countries have their own emergency
support systems and legislations being put into
place that will vary from those available in the
UK.
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The Statutory Residency Test and Expat Taxes

• British expats living abroad, expats unable to
  return to their new home overseas, and
  non-residents who are unable to leave the UK are
  all subject to the Statutory Residency Test
  (SRT). This test determines how many days are
  spent in each respective country per annum, and
  therefore which tax obligations the expat falls
  under.
• For example
• British expats pay UK income tax only against the
  income they earn in the UK as long as they are
  abroad for at least one year and spend no more
  than 183 days in the UK.
• An expat visiting their country of origin before
  lockdown may now find themselves unable to return
  to their new home country. This could mean
  extending a stay in the UK over 183 days and
  therefore becoming liable to pay UK income tax
  against their overseas earnings. This is because
  if a UK citizen meets the SRT, they will then be
  considered a UK resident and be taxable for their
  worldwide income under UK income tax
  legislation.
• Remember that different residency tests apply to
  different jurisdictions, and we advise seeking
  professional support with understanding how
  lockdown travel restrictions may impact your tax
  and residency status.

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Exceptions to the Statutory Residency
Test

• The challenge of a global pandemic is something
  new that the world of tax regulations is adapting
  to cope with. This presents a unique situation
  where legislation is being regularly updated to
  mitigate the impacts of lockdown.
• HMRC has published updates to define exceptional
  circumstances whereby additional days over and
  above 183 days will be disregarded, although this
  exemption is only applicable to extensions of up
  to 60 further days. These exceptions include
• Days spent in the UK due to exceptional
  circumstances beyond the individuals control
• Events that occur which prevent an individual
  leaving the UK
• Typically, the types of events that fall within
  these exceptions are natural disasters, civil
  unrest, an outbreak of war or a serious illness
  or injury. HMRC has clarified that this exception
  will be claimable by anybody advised not to
  travel and those in quarantine or self-isolating
  in line with public health guidance.
• However, the guidance also states that this
  exception will depend on the circumstances
  involved in each application, and may not be
  applied to every scenario.

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How to Claim Tax Exemptions During Lockdown?
The most crucial strategy in these times of
uncertainty is to remain up to date and proactive
with regards to your tax position. Some
exemptions may be available only on application,
and others will require independent verification
to support such an exception request. Working
with an expert wealth management consultant
means Claiming exemptions promptly and in
accordance with legislation Keeping track of
communications and correspondence to support any
future exception claims Being aware of the
changing international tax landscape, and where
there are opportunities to avoid any additional
obligations Understanding how CGT rules may be
impacted by your residency status   Chase
Buchanan is a highly regulated wealth management
for expats, specializing in providing global
expat financial planning solutions for those with
a global lifestyle. Contact our team today for
tailored support and guidance to ensure that your
tax position is protected during this challenging
period.
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THANK YOU For more information visit-
https//chasebuchanan.com
Contact us- 44 (0) 1252 852 045
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