HMRC has issued a warning over workers who face being “double taxed” from February. Millions of Brits will be scrambling to meet this year’s self-assessment deadline on January 31 over the course of this month, it has been warned.
HMRC has released a video to provide advice for individuals who are looking to submit their returns. Some could be taxed both in the UK and abroad – so could be “double taxed” – the tax department, which is now operating under the Labour Party, has warned.
HMRC explains you may be taxed on your UK income by the country where you’re resident and by the UK and you may not have to pay twice if the country you’re resident in has a ‘double-taxation agreement’ with the UK ahead of January 31.
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Depending on the agreement, you can apply for either partial or full relief before you’ve been taxed or a refund after you’ve been taxed. Each double-taxation agreement sets out the country you pay tax in and the country you apply for relief in and how much tax relief you get.
If the tax rates in the 2 countries are different, you’ll pay the higher rate of tax. The tax year may start on different days in different countries. Double taxation agreements do not apply to tax on gains from selling UK residential property.
You can claim for income including most pensions – most UK government (such as civil service) pensions are only taxed in the UKm wages and other pay (including self-employment), bank interest and dividends – special rules apply, which HM Revenue and Customs (HMRC) explain in section 10 of ‘Residence, Domicile and the Remittance Basis’.
Check HMRC’s ‘Double-taxation digest’ for countries that have an agreement with the UK, and how income like pensions and interest is taxed. You need to look at the relevant tax treaty for the rules on other types of income like wages and rent.