I just faced head on a gruesome task for UK non residents: my UK yearly Income Taxation return. This is an opportunity to give the UK more of your hard earned capital, because God help us, they really do need it.
If you leave the UK to live (and possibly work abroad) certainly for more than one year you will be considered NON resident. At that point (but not necessarily before) your worldwide income is NOT subject to UK taxation.
However any UK sourced funds, such as Bank interest (ho ho), dividends from shares, the UK government would like you to pay tax on , and then argue the toss with the country you do live in i.e (to not pay tax on it again locally).
Domicile is the country you intend to retire to. So you can be Domiciled in UK (i.e. plan to return) whilst resident in say Germany.
So what are the steps when you leave the shores of the UK?
On leaving UK complete the P85
Also tell the Department of work and Pensions (DWP) your new non UK address so your UK pension contributions can be handled
Expect to receive a paper tax form yearly. In fact the online TAX submission system is theoretically not available to Non residents, probably the group who would benefit from it most
The UK tax year runs April 6 year - April 5 year+1. You need to send in the tax return by jan 31st of the year following assessment. Currently therefore the deadline of Jan 31 2010 is the deadline for the taxation year April 6 2008-April 5 2009
Even when non resident you should send in a return since they can choose to fine you for non submission.
To take my practical example:
I completed the P86 form on leaving UK
Mr Inland Revenue did not send me any paper. taxation forms for year 2008-2009. To avoid a potential fine I have completed the online form, which technically is not allowed, but has worked for the last 3 years.
DWP realise I'm living outside of the UK so they send you a form asking you to contribute about 500 GBP yearly towards your UK pension. You need to contribute 44 years as a man to get the pension
I've a terrible suspicion that the UK government will not cut the yearly deficit and that the UK's fortunes will further deteriorate. This could lead to a devaluation of the the UK Pound so whatever UK state pension I might receive might be worth little in absolute UK terms and even less outside the UK. What a prospect!