When moving between the UK and Singapore, it is important to be aware of the differences that each jurisdiction imposes on areas of personal taxation. Failing to comply with the relevant procedures and local tax legislation could leave individuals with a series of penalties.
The table below highlights a list of arguably the most important areas of personal taxation that individuals should be aware of when moving between the UK and Singapore. Whilst both countries operate a progressive income tax system, this is where similarities cease as from here on, the UK and Singapore tax systems function differently in almost every way.
UK Tax System vs Singapore Tax System:
|UK Tax System
|Singapore Tax System
|Tax Year for individuals
|6 April to 5 April
|1 January to 31 December
|Who is required to file a Tax Return
|In the UK, most individuals who are employed will pay tax on their income through payroll and are not required to file a Tax Return.
Tax Returns are required where:
Tax Returns are required where:
|In the UK, HMRC operates a Pay As You Earn (PAYE) system where tax is collected by the employer through every payslip. The employer then remits the tax withheld to the tax office (HMRC).
|In Singapore, there is no income tax withheld at source via payroll. It is the employee’s responsibility to file their annual tax declaration and pay directly to the Inland Revenue Authority of Singapore (IRAS), the local tax authority.
|Tax Free Allowance
|UK residents (and in some instances non-residents) receive a tax-free personal allowance each year. In 2023-23, the tax-free personal allowance is £12,750. In certain circumstances this can be reduced or increased.
|Tax residents of Singapore receive the first S$20,000 of their income charged at a 0% tax rate.
|The UK operates progressive rates of income tax which include:
| As with the UK, Singapore operates a progressive income tax system. The current individual tax rates in Singapore are as follows:
The top marginal income tax rate will be increased with effect from Year of Assessment (YA) 2024 (calendar year 2023). Chargeable income in excess of $500,000 up to $1 million will be taxed at 23%, while that in excess of $1 million will be taxed at 24%; both up from the current rate of 22%.
|Capital Gains Tax
In the UK there is a Capital Gains Tax allowance of £12,300 per year (2022-23). After this your tax rate will depend on whether you’re a ‘Basic rate’ tax payer or ‘Higher rate’ tax payer:
Basic Rate: 18% on residential property and 10% other chargeable assets
Higher Rate: 28% on residential property and 20% other chargeable assets
|Singapore has no capital gains tax.
|In the UK, the standard Inheritance Tax threshold is £325,000 (which can increase to £500,000 where the home is passed to children of the deceased). Where an estate is valued over £325,000 there is a 40% Inheritance Tax rate.
|Inheritance tax, also known as estate duty was abolished for deaths on and after 15 February 2008 in Singapore.
|Tax Return Deadline
|31 January following the end of the tax year (31 October if filing a paper return)
|In Singapore, the filing due date for individual tax returns is 15 April following the end of the tax year. If filed electronically, the deadline is 18 April.
|Tax Payment Deadline
|31 January following the end of the tax year. This is the same as the tax return deadline.
|Once your individual tax return has been filed, you will receive your Notice of Assessment or tax bill between May and September. Any tax liability is due in full within 30 days of receiving your Notice of Assessment.
|Assessable on Worldwide Income
|UK residents, for tax purposes are taxed on their worldwide income*.
|Overseas income received in Singapore is generally not taxable and need not be declared in the Income Tax Return (‘territoriality’ system)
|National Insurance/ CPF
|In the UK, both the employee and employer are required to pay national insurance contributions each month. The rates vary from 0% to 13.8%. National Insurance is also due on self-employed income.
|Singapore operates ‘The Central Provident Fund’ (CPF). Both employees and employers must contribute to the fund. The statutory rate for employees is 20% and the rate of the employer’s contribution is 17%. (There are caps – above which CPF does not apply)
*Assessable on worldwide income (UK) – Individuals resident of the UK with non-domicile status can opt to claim remittance basis and not be taxed on their overseas income as long as it is not remitted to the UK.
The UK and Singapore Tax Systems: An Overall Comparison
As you would expect, Singapore’s tax system is far more attractive than the United Kingdom’s.
While the UK and Singapore both operate progressive income tax systems, the rate at which you pay tax in Singapore is substantially less, with the UK’s top rate of income tax over double that of Singapore’s. For example, where an individual earns a salary of £150,000 in the UK, they will pay a total of £52,460 in income tax. Whereas, if a tax resident earns £150,000 (S$250,500) in Singapore they will pay a total of £18,531 (S$30,947) in income tax. The above calculations are for illustrative purposes only, they do not consider any eligible reliefs or deductions in either country.
Singapore’s tax system also boasts no tax on capital gains, where the UK, although offers a tax free allowance of £12,300, applies tax rates of between 10% to 28% on capital gains above this.
What’s more, where Singapore has no inheritance tax, the UK still maintains an aggressive tax rate of 40% above the inheritance tax threshold.
It is therefore evident that where an individual moves from the UK and acquires tax resident status in Singapore, they can heavily reduce their tax burden.
If you require any advice or assistance with UK or Singapore personal tax, we are here to help. Simply send us an email at the address below or fill in our contact form to arrange a free initial consultation.
At Sheltons Accountants Singapore, Australai and the UK we have extensive experience in setting up and administering operations for overseas-based businesses. We provide a broad range of services, from setting up the entity and opening a bank account, to providing the legally required local director and a full range of tax, accounting, company secretarial and administrative services.
We are also experienced in providing local and international tax advice, advice on tax treaty issues and cross-border tax efficient structures.
If you need advice or assistance with UK, Singaporean or Australian matters, we’re here to help. Simply send us an email at SG@SheltonsGroup.com.
Click here to read our blog where we compare the UK and Australian Tax systems.