UK Tax ID Unique Tax Reference (UTR) for HK citizens Hong Kongers moving to the United Kingdom need to be aware that their HK tax ID numbers have no effect in the United Kingdom. They may be required to obtain a Unique Tax Reference Number (UTR) from HMRC. A UTR is a 10-digit number that is used for tax identification. This UTR will be used for Hong Kongers to correspond with HMRC and submit self-assessment tax returns. Hong Kong citizens that are employed and do not have significant earnings elsewhere may not be required to submit a self-assessment tax return to HMRC. National Insurance Number (NI) for healthcare with the National Health Service (NHS) and state pensions Employed HK citizens will be required to pay employee National Insurance. Their employers will also pay employer National Insurance. Part of these NI contributions supports Hong Kongers with free healthcare provided by the National Health Service (NHS). Hong Kongers moving to the UK must apply for a National Insurance Number. Hong Kong & UK tax treaty There is a tax treaty between Hong Kong and the United Kingdom. This means that Hong Kongers will not pay twice, once in the UK and then in HK. Some income elements will be taxable in one country and not another. The Inland Revenue Department (IRD) in HK will not tax any money earned in the United Kingdom, but HMRC is likely to place a tax charge on your Hong Kong earnings and investment income. UK tax residency (183-day myth) Have you heard of the 183-day tax residency myth? The story goes that you are only a tax resident in the United Kingdom or the United States if you have lived in those countries for more than 183 days. Nothing could be further from the truth. Hong Kongers with a BN(O) VISA or who are employed, buys a UK home and have family living in the UK could be considered a tax resident after just 30 days. Once Hong Kongers have triggered a tax residence status, their income earned in the United Kingdom becomes taxable. HK citizens that live in the UK and are tax residents need to decide how their Hong Kong income is to be taxed, if at all, in the United Kingdom. Hong Kong citizens can use either the remittance basis or have their HK/worldwide income taxed by HMRC in the United Kingdom. The benefit for Hong Kong citizens having their worldwide income taxed is that they will receive a personal allowance which is £12,570 at the time of writing. This UK personal allowance is the sum of money that may be earned tax-free by the HK citizen. The upside for Hong Kongers using the remittance basis is that they will not pay UK tax to HMRC on their HK income. The downside is that they will have to pay a tax surcharge as follows: £30,000 for non-domiciled individuals who have been resident in the UK for at least 7 of the previous 9 tax years immediately before the relevant tax year £60,000 for non-domiciled individuals who have been resident in the UK for at least 12 of the previous 14 tax years immediately before the relevant tax year Hong Kongers living in the United Kingdom should get tax advice to see which pathway (remittance basis Vs worldwide tax) is best for their situation. Hong Kongers also need to be aware that their worldwide income is taxable by HMRC once they have lived in the UK for more than 15 years. At this point, HK citizens will be UK domiciled. HK citizens paying UK inheritance Tax Once a Hong Konger is deemed a UK-domiciled person, their worldwide assets are subject to 40% inheritance tax based on the net assets. Hong Kong citizens are entitled to a £325,000 lifetime allowance before applying the 40% inheritance tax. This means an HK citizen can pass £325,000 in assets to their loved ones without the 40% inheritance tax charge. The £325,000 Inheritance tax lifetime allowance may be increased to £500,000 if they have a home with a greater value than £325,000. This may be doubled for married couples meaning that up to £1,000,000 in net assets could be passed to children without paying IHT to HMRC. For example: A Hong Konger that lived in the UK for 14 years would pay Inheritance tax on their UK assets only. Once an HK citizen has lived in the United Kingdom for 15 years, the Inheritance Tax will apply to their Hong Kong /worldwide assets. This is a significant tax burden for Hong Kongers to consider when deciding to live in the United Kingdom for more than 14 years. For example, a Hong Konger has a UK home with a market value of £500,000 but a mortgage of £175,000. In this scenario, the Hong Kong citizen would not pay any UK Inheritance Tax on the £325,000 net asset value. However, after 15 years of living in the United Kingdom, their HK assets would also be taxed by HMRC. If the Hong Kong citizen had an HK home valuing £500,000 without a mortgage, it would be pulled into the equation for UK inheritance tax purposes. The £500,000 HK asset would be subject to a 40% inheritance tax of £200,000. Use our free UK Inheritance Tax calculator to see how much tax you are likely to pay on your death.
UK Tax ID Unique Tax Reference (UTR) for HK citizens Hong Kongers moving to the United Kingdom need to be aware that their HK tax ID numbers have no effect in the United Kingdom. They may be required to obtain a Unique Tax Reference Number (UTR) from HMRC. A UTR is a 10-digit number that is used for tax identification. This UTR will be used for Hong Kongers to correspond with HMRC and submit self-assessment tax returns. Hong Kong citizens that are employed and do not have significant earnings elsewhere may not be required to submit a self-assessment tax return to HMRC. National Insurance Number (NI) for healthcare with the National Health Service (NHS) and state pensions Employed HK citizens will be required to pay employee National Insurance. Their employers will also pay employer National Insurance. Part of these NI contributions supports Hong Kongers with free healthcare provided by the National Health Service (NHS). Hong Kongers moving to the UK must apply for a National Insurance Number. Hong Kong & UK tax treaty There is a tax treaty between Hong Kong and the United Kingdom. This means that Hong Kongers will not pay twice, once in the UK and then in HK. Some income elements will be taxable in one country and not another. The Inland Revenue Department (IRD) in HK will not tax any money earned in the United Kingdom, but HMRC is likely to place a tax charge on your Hong Kong earnings and investment income. UK tax residency (183-day myth) Have you heard of the 183-day tax residency myth? The story goes that you are only a tax resident in the United Kingdom or the United States if you have lived in those countries for more than 183 days. Nothing could be further from the truth. Hong Kongers with a BN(O) VISA or who are employed, buys a UK home and have family living in the UK could be considered a tax resident after just 30 days. Once Hong Kongers have triggered a tax residence status, their income earned in the United Kingdom becomes taxable. HK citizens that live in the UK and are tax residents need to decide how their Hong Kong income is to be taxed, if at all, in the United Kingdom. Hong Kong citizens can use either the remittance basis or have their HK/worldwide income taxed by HMRC in the United Kingdom. The benefit for Hong Kong citizens having their worldwide income taxed is that they will receive a personal allowance which is £12,570 at the time of writing. This UK personal allowance is the sum of money that may be earned tax-free by the HK citizen. The upside for Hong Kongers using the remittance basis is that they will not pay UK tax to HMRC on their HK income. The downside is that they will have to pay a tax surcharge as follows: £30,000 for non-domiciled individuals who have been resident in the UK for at least 7 of the previous 9 tax years immediately before the relevant tax year £60,000 for non-domiciled individuals who have been resident in the UK for at least 12 of the previous 14 tax years immediately before the relevant tax year Hong Kongers living in the United Kingdom should get tax advice to see which pathway (remittance basis Vs worldwide tax) is best for their situation. Hong Kongers also need to be aware that their worldwide income is taxable by HMRC once they have lived in the UK for more than 15 years. At this point, HK citizens will be UK domiciled. HK citizens paying UK inheritance Tax Once a Hong Konger is deemed a UK-domiciled person, their worldwide assets are subject to 40% inheritance tax based on the net assets. Hong Kong citizens are entitled to a £325,000 lifetime allowance before applying the 40% inheritance tax. This means an HK citizen can pass £325,000 in assets to their loved ones without the 40% inheritance tax charge. The £325,000 Inheritance tax lifetime allowance may be increased to £500,000 if they have a home with a greater value than £325,000. This may be doubled for married couples meaning that up to £1,000,000 in net assets could be passed to children without paying IHT to HMRC. For example: A Hong Konger that lived in the UK for 14 years would pay Inheritance tax on their UK assets only. Once an HK citizen has lived in the United Kingdom for 15 years, the Inheritance Tax will apply to their Hong Kong /worldwide assets. This is a significant tax burden for Hong Kongers to consider when deciding to live in the United Kingdom for more than 14 years. For example, a Hong Konger has a UK home with a market value of £500,000 but a mortgage of £175,000. In this scenario, the Hong Kong citizen would not pay any UK Inheritance Tax on the £325,000 net asset value. However, after 15 years of living in the United Kingdom, their HK assets would also be taxed by HMRC. If the Hong Kong citizen had an HK home valuing £500,000 without a mortgage, it would be pulled into the equation for UK inheritance tax purposes. The £500,000 HK asset would be subject to a 40% inheritance tax of £200,000. Use our free UK Inheritance Tax calculator to see how much tax you are likely to pay on your death.
