Living in the UK
If you are living in the UK, the starting point in determining the tax liability for a resident who is domiciled outside of the UK, is that overseas income/gains are taxable on the arising basis just the same as for any UK domiciled individual. Jeffcote Donnison’s experienced tax team can provide clear and concise advice to guide you through the complex tax rules, remittance requirements and legal obligations.
What is a remittance?
If you are living in the UK, you have the option of making a claim for the remittance basis, which restricts UK tax on any non-UK source income and gains, and to only charge the amount actually brought into the UK in the tax year. The downside of making this claim is that you forfeit your personal allowance for Income Tax purposes and annual exemption for Capital Gains Tax.
Matters become even more complex when you have been resident in the UK in seven out of the preceding nine UK tax years, as the claim must be supported by the payment of an annual charge of £30,000 in addition to the tax on any income or gains remitted. This sum is known as the ‘remittance basis charge’ (RBC). From 2012/13 where an individual has been resident in the UK for 12 out of the previous 14 years, the RBC increases to £50,000.
How do we help?
Identification and effective segregation of relevant overseas income and gains is therefore imperative to enable a strategy to make remittances in the most efficient manner. Special rules apply when remittances are made from accounts which contain a mixture of income, and capital (‘mixed funds’), which essentially treat the remittances as being from the income first.
HMRC take the view that whatever method an individual may use to bring income or gains into the UK, or to benefit in the UK from such income or gains, will be identified. The remittance does not need to benefit the taxpayer, as payment to spouses, minor children or to your company or trust could also be cause for prosecution. The rules are wide ranging and complex. We have years of experience in assisting our clients with the ever-changing tax obligations of living in the UK and work closely to make your obligations as easy as possible.