Tax Guide for UK-Based Pakistani Expats

You're UK tax resident if you spend 183+ days in the UK, or meet the automatic residence tests. As a resident, you're taxed on **worldwide income**.

### 1. UK Employment Income - Taxed through PAYE (Pay As You Earn) - Personal allowance: £12,570 (2024/25) - Basic rate: 20% on £12,571-£50,270 - Higher rate: 40% on £50,271-£125,140 - Additional rate: 45% above £125,140 ### 2. Pakistani Rental Income Must declare to HMRC via Self Assessment: - Gross rent minus allowable expenses - **Allowable:** Mortgage interest (restricted), repairs, management fees, insurance - **Not allowable:** Property improvements, personal expenses ### 3. Pakistani Dividends - First £1,000 dividend allowance is tax-free - Basic rate: 8.75% - Higher rate: 33.75% - Additional rate: 39.35% ### 4. Pakistani Bank Interest - First £1,000 savings allowance (basic rate taxpayers) - £500 for higher rate taxpayers - £0 for additional rate taxpayers

The UK-Pakistan Double Taxation Convention prevents double taxation: ### Foreign Tax Credit Relief (FCTR) If you pay tax in Pakistan, you can claim credit against UK tax: **Example:** - UK rental income: £10,000 - Pakistan tax paid: £1,500 - UK tax due: £2,000 - **UK tax after FCTR: £500** You pay the difference to HMRC. ### How to Claim FCTR 1. File Self Assessment tax return 2. Complete foreign pages 3. Include Pakistani tax certificates 4. HMRC calculates relief automatically

**Important:** Remittances themselves are **not taxable** in the UK. They're already-taxed money being moved. However, if you're **non-domiciled** and use the remittance basis, different rules apply.

If you're non-UK domiciled (permanent home is Pakistan): - Can claim **remittance basis** - Only taxed on UK income + foreign money brought to UK - £30,000 annual charge if claimed for 7+ years Most Pakistanis should claim arising basis (taxed on worldwide income) as it's usually cheaper.

UK IHT applies to UK assets above £325,000 threshold (40% tax). **Pakistani assets:** Generally not subject to UK IHT if you're non-domiciled. **Planning:** Consider life insurance in trust to cover IHT liability.

### 1. Keep Records - Pakistani tax returns - Bank statements - Property rental records - Exchange rates on transaction dates ### 2. File on Time - Self Assessment deadline: January 31 - Penalties start at £100 ### 3. Use an Accountant Cross-border tax is complex. Expect to pay £500-1,500/year for professional help. ### 4. Consider ISA Allowance Max out stocks & shares ISA (£20,000/year) for tax-free growth. --- **Disclaimer:** This is general guidance, not tax advice. Consult a qualified accountant for your situation. **Related tools:** - [Tax Calculator](/calculators/tax) - [Currency Converter](/converter)