The United Kingdom is one of the best countries in the world to live, study, do business, or simply spend your entire life. If you aim to become a British citizen to enjoy all the benefits it offers, you can apply to naturalise or register as a British citizen provided you meet eligibility criteria. Once you become a British citizen, you can not only apply for a British passport, but also vote in local or national elections, stand for public office, and participate more fully in your local community’s life. 

If you are not a British citizen by birth, you may be able to acquire citizenship through naturalisation or registration. If you are aged 18 or over with an ILR (Indefinite Leave to Remain) or Settled status under the EUSS (EU Settlement Scheme), you can apply for naturalisation after holding any of these statuses for at least one year unless you are a Spouse (husband/wife) or civil partner of a British citizen, in which case you can apply for naturalisation immediately after receiving settlement status in the UK. 

Importantly, Naturalisation is not an entitlement for anyone but is a matter of law as set out in the BNA (British Nationality Act) 1981. The Home Secretary may choose to exercise discretion while assessing whether to naturalise even if you meet the statutory requirements. You will normally be naturalised only if you satisfy a number of statutory requirements, but if the Home Secretary thinks granting you citizenship would not be in the public interest, they may refuse your application. For example, if granting you British citizenship could adversely impact international relations.

Good Character Requirement – One of the key requirements for British Citizenship Applications

Good Character is a statutory requirement for British citizenship whether through naturalisation or registration. This requirement is a key rule used by the UK Home Office when deciding your British citizenship application, applies to all applicants aged over 10, and is checked to ensure that you observe UK laws and show respect for the rights and freedoms of its citizens. 

The good character requirement covers various elements including Criminality, Financial soundness, Deception, and Immigration matters. 

In this article, we are discussing one aspect of the Good Character requirement, which is tax Issues (a part of financial soundness) and their impact on British Citizenship applications.

What is a tax issue under the Good Character requirement for British citizenship?

One of the duties and obligations which you are expected to fulfil is payment of income tax and National Insurance contributions. The Home Office, while considering your British citizenship application, may ask HMRC (HM Revenue & Customs) for confirmation that your tax and National Insurance affairs are in order. This also means that the information you have provided along with your application is accurate and that you have complied with your UK tax obligations. 

Your tax and National Insurance affairs are generally considered to be "in order" if:

• You have correctly reported your income to HMRC. 

• You have paid the Income Tax and National Insurance contributions that are due. 

• You have submitted on time any required Self Assessment tax returns. 

• Your employer has correctly reported your salary through the PAYE system, if you are an employee. 

• There are no unexplained differences between your citizenship application and your HMRC records. 

• If you owe tax, you have an agreed payment arrangement with HMRC and are complying with it. 

• There is no tax evasion or tax fraud on your part

When you sign the application form, you will be giving your consent to the Home Office to approach HMRC. If you are liable for income tax but do not pay through PAYE (PAYE means you pay your tax as you earn your income, rather than paying a large tax bill at the yearend), you must show to the Home Office that your obligations towards the HMRC have been discharged by attaching a Self-Assessment Statement of Account (it is an official document issued by HMRC that shows the current balance on your Self-Assessment tax account and it summarises the tax you owe, the payments you have made, any refunds due, and whether your account is up to date).

You must disclose the information to the Home Office if you have ever been declared bankrupt, found to have unreasonably failed to pay your council tax for example by a local authority or a court, engaged in fraud in relation to public funds (including claiming public funds you were prohibited from accessing or to which you were not entitled, or failing to declare your full circumstances), or have an unpaid NHS debt (this is money that a person owes to the National Health Service for healthcare services that they were required to pay for but have not paid) of £500 or more.

What is the impact of tax issues under the Good Character requirement for British citizenship?

Tax issues don’t necessarily mean a “big scandal” to cause trouble. What is important is whether your record suggests any non-compliance or dishonesty.

Your financial situation can affect your good character and how it is considered when deciding your British citizenship application. If you have failed to fulfil your tax obligations, your application may be refused. 

The Good Character requirement for the purpose of British citizenship is not about never owing tax. Instead, it is about whether you have:

• complied with UK tax laws; 

• been honest with HMRC and the Home Office; 

• paid taxes and National Insurance when legally required; and 

• promptly corrected any genuine mistakes. 

If the Home Office finds there is deliberate tax evasion, dishonest tax reporting, or significant unexplained discrepancies, they are much more likely to affect your British citizenship application than an honest error that you have rectified.

1. Impact of non-payment of income tax on British citizenship application?

On most types of income, you need to pay income tax. These include:

• Employment income (usually deducted through PAYE) 

• Self-employment profits

• Pension income 

• Rental income  

• Other investment income 

If you are an employee, your employer usually deducts your income tax and National Insurance automatically through the PAYE system. On the other hand, if you are a self-employed person or have other taxable income, you may be required to submit an annual Self-Assessment tax return to HMRC (HM Revenue & Customs).

Importantly, payment of income tax is assessed under the Good Character requirement as part of your British citizenship application. The Home Office expects you to comply with UK tax laws and to have your tax and National Insurance affairs in order. This does not mean that every tax mistake you have made or any outstanding amount will automatically lead to a refusal. What matters for the Home Office is whether you have acted honestly, complied with your legal obligations, and taken steps to correct any problems.

Your British citizenship application will generally not be affected if you have paid your taxes correctly, made an honest mistake and corrected it promptly, and have agreed a payment plan with HMRC for tax you owe and are keeping to it. 

The Home Office is more likely to refuse your application where you have deliberately, for example:

• Failed to declare your taxable income. 

• Filed false tax returns. 

• Used false documents to reduce tax liability. 

• Concealed any type of earnings. 

• Got involved in tax fraud/evasion. 

• Ignored notices from HMRC repeatedly without good reason. 

The issues mentioned here may indicate a lack of good character, particularly where you are found dishonest.

2. Impact of non-payment of council tax on British citizenship application

Council tax is a local tax you are required to pay on residential properties in the UK. This tax is used to fund local public services, such as waste collection, road maintenance, social care, libraries, fire and emergency services, and local education. Most adults living in a property in the UK are responsible for paying it, although discounts and exemptions are available in certain circumstances. Paying council tax when it is due is one of the legal responsibilities for UK citizenship applications.

Payment of council tax is considered as part of the Good Character requirement for a British citizenship (naturalisation) application. The Home Office will not simply check whether you have always paid every council tax bill on time but will also ensure whether you have deliberately failed to meet your legal obligations or acted dishonestly.

Your British citizenship application will not normally be refused if you have been unable to pay council tax due to your financial position, particularly if you have, or are negotiating with, the relevant authority. However, you are legally required to pay council tax, and non-compliance is a punishable offence.

Therefore, your application will normally be refused where you have either:

• unreasonably failed to pay council tax

• provided a false statement (s), including failing to declare your full circumstances, to avoid paying the correct rate

How can Visa and Migration Ltd. help?

British Citizenship requires you to meet certain statutory requirements, including the Good Character requirement. Tax compliance and payment are integral factors used to assess your Good Character. 

We check whether you have paid income tax and National Insurance through PAYE (if you are an employee) or have submitted a Self-assessment Tax return to HMRC if you are self-employed. We can also help you submit a Self-assessment Tax return to HMRC. 

We check whether you have made minor mistakes with your tax liabilities that were not deliberate to avoid any refusal of your British Citizenship application.

For expert advice and queries on British Citizenship application, you can call us at +44 (0)20 3411 1261 or write to info@visaandmigration.com