Showing posts with label residence. Show all posts
Showing posts with label residence. Show all posts

Wednesday, November 13, 2013

Split Year Treatment under new SRT

Normally, if you are resident in the UK for any part of a tax year you will be taxed as a UK resident for the whole of the tax year. However, there are special rules which may apply to you if you either leave the UK to live or work abroad, or come from abroad to live or work in the UK. These special rules split the tax year into a UK part, when you are taxed as a UK resident, and an overseas part, when you are taxes as a non-UK resident.

Before 6 April 2013, HMRC operated these special rules as a concession known as Extra Statutory Concession A11. After 5 April 2013, these special rules are contained in law, under the Statutory Residence Test ('SRT'). Once you have determined using the new SRT test that you are non resident for part of the year you still need to find out what is the exact date where the status changes. As with the residence test, treatment is different whether you are a leaver or an arriver. Here are the rules for finding out that date:

Friday, August 2, 2013

The Remittance: some examples


HMRC will be soon be undertaking an "educational exercise" in respect of individuals taxed under the remittance basis in 2011/12. They are of the opinion that taxpayers may not fully understand the remittance basis, and are concerned that they will have experienced problems in completing their tax returns accurately. They will also be sending out a factsheet with this letter. They say that the intention behind the letters is primarily educational, and hope that it will prompt taxpayers to conclude that they need extra help in this area.

People don't always understand that it's not just a transfer of money that can trigger a remittance. Here are the examples mentioned in the fact list:

Money transfers to the UK

  • You transfer some of your foreign income from your offshore bank account to your UK bank account.
  • You withdraw some cash from your foreign bank account (that contains your foreign income) whilst overseas and bring the cash with you when you return to the UK.
  • You give some of your foreign income to your spouse or civil partner who brings the money to the UK.
  • You transfer some of your foreign income to the UK account of a registered Charity.
  • You rent out your holiday home abroad and the customer pays the rent directly into your UK bank account.
  • You loan some of your foreign income to a company you control overseas or settle some foreign income in an offshore trust. The company or trustees bring the money to the UK.
  • You inherited money a few years ago that you deposited into a foreign interest bearing bank account and you transfer some of the money from this account to the UK. Although the inheritance is not taxable when remitted, the account will also contain taxable interest that will be treated as remitted before any of the non taxable inheritance.

Thursday, July 11, 2013

Bye bye NOR... Hello OWR!

People who have come to the UK to work and who travel a lot have known about the concept of Non Ordinary Residence (NOR) as it has allowed them to benefit from significant tax savings. Under that status, one would only pay income tax on income related to UK work as long as foreign income was kept overseas.

The concept of ordinary residence is no more however. It was withdrawn in the last budget with effect from tax year 2013-2014. That's the bad news. The good news however is that it was replaced by the concept of Overseas Workday Relief (OWR). This is one is statutory. The main difference between the 2 is that one cannot benefit from OWR if domiciled (which was not the case with NOR).

Thursday, November 29, 2012

Buying your way into the UK

Property prices in London have challenged economic conditions in the past decade. There is a very simple reason for that. There are just too many rich foreigners coming to the UK. It's actually quite easy to explain. Not only the is the tax system very attractive for them thanks to the non-domicile status but it's quite easy to obtain a Visa if you are ready to bring in enough money into the British Economy. In many jurisdictions, obtaining residence visas can be fraught with red tape, delays, quota restrictions and other hidden difficulties, often resulting in refusals of such applications. Not so in the UK.

Here are the options:

The Tier 1 Entrepreneur Visa

The basic requirements for the initial visa are that the individual needs to show evidence of having £200,000 available to invest in the UK and needs to be able to speak English.

Monday, November 19, 2012

The new Statutory Residency Test (SRT)

Currently it can be very difficult to know for sure if one is UK resident or not. The uncertainty has been the reason there has been so many tax cases on that subject, often with a surprising outcome. We have heard about the new Statutory Residency Test (SRT) for a few years now and it looks like it's going to happen next year at last. As a reminder, here is a summary of the current situation today:

If you are not UK resident, you will become UK resident if either applies:
  • You are physically present for 183 days or more in a tax year
  • You have visited the UK for an average of 91 days per annum over 4 consecutive tax years (youwill then be regarded as resident from the beginning of the 5th year)

Thursday, March 29, 2012

More bad news for non-doms

Non-domiciled individuals have been watching this Budget particularly carefully as it had already been announced prior to its delivery on 21 March 2012 that the Chancellor would be taking action in relation to individuals who acquire UK property through offshore companies. In order to tackle what the Government calls the 'enveloping' of high value properties into companies to 'avoid paying a fair share of tax', three measures are to be introduced:
  • a new 15% rate of stamp duty land tax (SDLT) to purchases of UK residential properties worth over £2 million by 'non-natural persons'
  • an annual charge on UK residential properties valued at over £2million owned by such persons
  • an extension of the capital gains tax (CGT) regime to gains on the disposal of UK residential property and shares or interests in such property by non-natural persons who are non-resident

Sunday, October 2, 2011

UK expats at risk of being caught by residency test changes


As the British government seeks ways of supplementing its tax take, the British residency test will be changing from April 2012. If you are a British citizen who’s working in Dubai, Hong Kong or Singapore because you want to pay less tax, this could be a big issue. The new rules are very complex but in a nutshell, you could put yourself at risk if you visit the UK for more than 10 days per year. Coming back to the UK for more than that makes you fall into the connections tests and at risk of being classified as UK resident.

These connections tests look at various things, including whether you still have a house in the UK, whether your family are based in the UK and whether you have financial ties to the UK. Although children at boarding school are not counted as being ‘family in the UK’ during term time, they will count as ‘family in the UK’ if they remain in the country staying with grandparents or friends during school holidays. Equally, when the new rules come into effect in April, there will be a look back over three years at people’s previous visits and connections.