International Tax
Your residence position and domicile status can have a significant impact on how much UK tax you pay, and the opportunities available to you to take advantage of what can be a valuable tax position.
What is tax residence?
Simply put, tax residence is the country in which you usually spend the most time, or have the most connections.
Your UK residence status affects whether you need to pay tax on your UK and foreign income. Each country has its own rules, and UK tax residency is determined by the Statutory Residence Test.
What is domicile?
Domicile can best be described as your ‘permanent home’, which may not be the same as the country you live in.
Your domicile status depends on your family background, in particular that of your father, as well as the choices you have made in your own life to make a country your permanent home.
Why is it important?
Your residence and domicile status impacts how much tax you need to pay in the UK.
Specifically, different tax rules will apply to UK and foreign income and gains. It can also impact the tax reliefs and allowances available to you.
Note that residence and domicile are complicated areas and so we recommend a thorough evaluation to establish your position.
How can we help?
Residence
If you spend time in more than one jurisdiction, or are planning on moving to or from the UK, you will no doubt have a substantial to-do list, without also needing to worry about your UK tax position. We will take the time to discuss your plans with you and will advise you on how to make the best of your changing position.
We will:
Advise you on your current UK tax position and filing obligations.
Review your intended plans and advise on how this will impact your UK tax residence position.
Provide clear information and guidance on how to maximise UK tax savings.
Review your asset base and provide recommendations on the tax impact of changes (e.g. the sale of a property, remittance of offshore funds to the UK, or timing of payment of a dividend from a personal company).
Provide support and advice to ensure your UK tax filing requirements and tax payment deadlines are met.
Domicile
In order to avoid unnecessary and unexpected tax liabilities, it is critical that your UK and offshore account structure is appropriate, well understood, and well managed. We use our tax and banking experience to guide you through the complex rules and avoid the potentially costly pitfalls.
We will:
Provide an opinion on your current domicile status, and provide guidance on how to strengthen the evidence of a non-UK domicile status in case of challenge from HMRC.
Advise on the benefits and costs of accessing the remittance basis of taxation, with calculations to compare with the arising basis of taxation.
Review your asset base, and make recommendations for amendments for UK tax efficiency.
Advise on the inheritance tax impact of a non-UK domicile status, and how the valuable spouse exemption is restricted if a husband and wife don’t have the same domicile status.
Provide practical recommendations on how to organise and manage your UK and offshore account structures, and work collaboratively with your bank to implement any recommendations.
Advise on what transactions would constitute a ‘remittance’ to the UK, so as to avoid unexpected and costly tax charges.
Analyse relevant Double Tax Agreements between jurisdictions to determine the correct treatment of foreign income and gains.
Advise on the potential use of tax reliefs specific to non-UK domiciled individuals, such as Overseas Workday Relief (relevant in the first 3 years of UK tax residence, if you have an employment which involves work outside of the UK), and Business Investment Relief (relevant if you have funds outside of the UK that you would like to invest in a UK company, without tax being due on the remittance of funds).
Provide support and advice to ensure your UK tax filing requirements and tax payment deadlines are met.
For a comprehensive review of your current circumstances, precise calculations of your liabilities and advice on how to best optimise your position, please contact us