I am an Indian resident planning to relocate to UK for my wife’s higher education. I will get a Tier II general visa and will be in the UK for about three years from November 2022. However, I will continue to work for my current company in India. Will I need to declare my Indian income in the UK?
Since I will be paying tax on my income (salaries and house rental income) in India itself, do I need to pay tax in the UK as well? Will I need to fill out an annual self-assessment form in the UK?
Can I send certain amounts to my account in the UK or to my wife’s account without being taxed?
—Name withheld on request
Whether you need to declare your income in the UK or pay tax on it will depend on your residential status in India, which has to be taken out under the Income Tax (IT) Act of India as well as your location . Britain.
If you are a resident of India, your entire global income will be taxable in India. If you are a non-resident or resident in India but not ordinarily resident in India, then only income earned or received or arising in India will be taxable in India.
Hence, you need to find out your residential status in India for each financial year separately.
You should do the same for your residential status in the UK. If your income becomes taxable in the UK, you can take advantage of the Double Tax Avoidance Agreement (DTAA) between the two countries to ensure that you do not pay tax twice on the same income.
You are allowed to repatriate up to $1 million from a Non-Resident Ordinary (NRO) account, subject to specified conditions. Funds are fully repatriable from Non-Residential External (NRE) accounts.
Several tax systems prevail in the UK, one of which is the remittance basis of taxation.
Under this, only that part of your income that you remit to the UK can be taxed in the UK and a tax credit of the remittance portion is also admissible under the DTAA. However, there are some terms associated with this type of taxation, which may be better explained by an expert from outside the UK.
Archit Gupta is the founder and CEO of Clear.in.