FAQ » UKTax.nz !!

Below are a few questions with typical answers based on scenarios which we have and regularly do deal with; however they are represented here in a general nature; your situation will very likely differ and result in a different outcome; in all situations you should contact us first.

Although the information below and on this website is given in good faith uktax.nz and XA Limited accept no responsibility of whatever nature including liability whatsoever and howsoever caused arising from or in any way connected with the information below or on this website.

Absolutely. As registered tax agents with both HMRC and Inland Revenue, we frequently file both tax returns for clients.

Absolutely, as a register tax agent with HMRC we have been completing and filing UK Self-Assessment Tax Returns using the latest professional tax software over 10 years. Our director has over 30 year of UK tax experience and is a UK Chartered Tax Adviser.

Absolutely, we are happy to work alongside NZ accountants to assist their clients with the filing of their UK Tax Returns and will respect your relationship with that client.

Yes you can. You need to ensure you complete and file the Residence, Remittance pages of your UK tax return.

If you are a first-time resident of NZ you can claim transitional resident relief. You can also claim this relief if you have been a non-resident of NZ for at least 10 years and have not claimed the relief before. The relief can be for a period of up to 49 months and exempts from NZ income tax overseas income that is not employment income or self-employment income; both employment and self-employment income remain taxable in NZ no matter where they are derived from. However, you cannot claim transitional resident relief if you are also claiming Working for Families tax credits. Transitional resident relief will exempt income from overseas investments, such as rental property income, bank interest and dividend income as well as overseas pensions. The relief also applies to overseas income from foreign investment funds, financial arrangements, Non-resident withholding tax obligations and pension transfers.

If you are planning on staying in NZ permanently you should consider, together with the assistance of your financial adviser, whether you are able to and whether you should transfer your UK pension to NZ. As there is NZ tax to pay on the transfer of overseas pensions the longer this is left the more NZ tax is payable. Transfers while a transitional resident are not taxable.

If you have a UK mortgage in respect of say a rental property you need to be aware that NZ financial arrangement rules will likely apply to the mortgage. Effectively what this will mean is your mortgage balance will be subject to foreign exchange gains or losses including unrealized gains or losses which potential can lead to income tax liabilities. Depending upon your circumstances these liabilities could occur on an annual basis or at the very least when the mortgage is repaid or deemed to be repaid.

In addition, as you will be paying interest to a non-resident (the mortgage lender) you will likely need to account for Non-Resident Withholding Tax on the interest payments. As an alternative to paying Non-Resident Withholding Tax, you can register as an Approved Issuer and pay Approved Issuer Levy on the mortgage interest. As registration for Approved Issuer Levy cannot be backdated, this needs to be completed before your transitional resident relief expires otherwise Non-resident Withholding Tax will apply to the mortgage interest.

You also need to consider NZ Foreign Investment Fund rules which apply in respect of most overseas investment funds such as company shareholdings and unit trusts. Such investments are taxed based on various "methods" which usually means either deemed dividend rates of income based on the market value of the investment or using the comparative values of the investment income, changes in holdings and growth throughout the year; both of these methods take account of realized and unrealized foreign exchange gains and losses. Depending upon the investment fund other calculation methods may apply.

Firstly, you will need to consult your financial adviser regarding the transfer of any pension. If you then decide to transfer your pension to NZ potentially there is tax to pay. Although you may not be eligible to transitional resident relief there is also a four-year exemption that applies to pension transfers which you may be eligible to. After the expiry of any relief available, generally, since 1 April 2014, any income tax due will be either based on the length of time you were resident in NZ until the transfer or the increase in the transferred value of the pension since arriving in NZ (or the expiry of any reliefs).

Generally, as a resident of NZ your UK pension is taxable in NZ and should be included in your NZ income tax return. Further, it is also likely that your pension is not subject to tax in the UK. Where this is the case, no tax credit can be claimed in NZ for UK tax paid. A refund application for the UK tax paid and an application to have future UK pensions payments paid gross should be made.

Your UK rental property income is taxable NZ as well as the UK; should you pay tax on the rental property income in the UK you can generally claim this is a tax credit against your NZ income tax liability. You should note that the rules regarding what can be claimed as a deduction against the rental property income in NZ do differ from the UK.

Your UK mortgage will be subject to NZ financial arrangements rules. Effectively what this will mean is your mortgage balance will be subject to foreign exchange gains or losses including unrealised gains or losses which potential can lead to income tax liabilities. Depending upon your circumstances these liabilities could occur on an annual basis or at the very least when the mortgage is repaid or deemed to be repaid.

Employment income is generally subject to tax in the country in which the work is physically performed. Consequently, on the basis your employment is performed in NZ, the employment income is likely not taxable in the UK. Also, depending upon their presents in NZ, the UK employer may have to register as an employer with Inland Revenue in NZ (or you may be able register as a NZ representative of an overseas business).

This is actually a complex situation, but basically your company is very likely deemed solely resident in NZ and not resident at all in the UK. Consequently, this therefore means your UK company has migrated for tax purposes to NZ. Your UK accountant should have advised HMRC of the company migration prior to you leaving the UK. For NZ purposes the company needs to register with Companies Office and with Inland Revenue. Since your arrival, the company and income derived by you from the company will be subject to tax in NZ.

This will depend on the type of company and the total cost of all such shares owned. If the total cost of all such shares is NZ$50,000 or more they will likely be subject to NZ foreign investment fund rules (or potentially NZ Controlled Foreign Company rules). Under the foreign investment fund rules income is calculated under various “methods”. The ones likely to apply to you will be the Fair Dividend Rate method or the Comparative Value method. It is the income calculated under one of the methods that is entered in your NZ income tax return not the actual dividend income derived; certain foreign tax credits deducted from your overseas income can still be claimed. If the total cost of all such shareholdings is less than $50,000 then it is likely only the dividend income derived should be included in your NZ income tax return, certain overseas tax credits can also be claimed but not all.

As you have sold a UK residential property and as a non-resident of the UK you are required to file a Non-Resident Capital Gains Tax return with HMRC within 60 days (previously 30 days) of conveyance of the property; any capital gain tax due will also be payable at the same time. Certain reliefs may be available to you as well as the Capital Gains Tax Annual Exemptions.

You are also potentially subject to NZ bright-line rules for residential property sold within 10 years of acquisition (previously 2 years or 5 years depending upon when the property was acquired); the rules apply to all worldwide residential property you may own not just NZ residential property. Any gain on the property caught by the bright-line rules will be subject to income tax in NZ.