5 - Residence & Domicile Flashcards

1
Q

Difference between residence and domicile. What does each effect most

A

Residence - looks at the status of an individual in any one tax yr. effects income tax & NIC

Domicile - looks at the country an individual regards as their permenant home. This effect IHT mostly

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2
Q

Automatic overseas test

A

If an individual meets any one of the below they will be classed as non-UK resident:

Test 1
- resi. 1 of last 3 tax yrs but <16 days in the UK in tax yr

Test 2
- resi. 0 of last 3 tax yrs but <46 days in UK in tax yr

Test 3
- works full time over seas
- <91 days in UK
- <31 days in tax yr spent working in UK (3hr min.)

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3
Q

Automatic residence test

A

Test 1
- spent 183 days or more in UK

Test 2
- have a home in the UK and atleast one period of 91 days (30 of those days within tax yr)
AND
- have no overseas home or spend no more than 30 days in overseas home

Test 3
- work full time for any period of 365 days in UK with no significant break

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4
Q

Sufficient ties test (5 ties)

A

Family - have a spouse or minor in UK

Accommodation - having accommodation available for 91+ days in UK

Work - working 40+ days in UK

Presence - spending 90+ days in either of last 2 tax yes

More days - for leavers only specifies if spent more days in UK than other country

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5
Q

How to classify an arriver or leaver

A

Arriver - not resident in UK for previous 3 tax yrs

Leaver - resident for atleast one of last 3 tax yrs

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6
Q

Residence 3 part statuatory test

A
  1. Automatic overseas test
  2. Automatic residence test
  3. Sufficient ties test
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7
Q

Day of presence meaning regarding residence

A

Being present in UK after midnight

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8
Q

Working day classification

A

Working more than 3hrs

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9
Q

Who is domicile decided by?

A

By the courts under general law

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10
Q

4 Types of domicile

A

Domicile of origin - place of birth and adopt fathers domicile unless born after death of father then is mother. Usually stays with them until 16

Domicile if dependence - if legally dependent then adopt that domicile of theirs

Domicile of choice - after age 16 can choose their domicile by settling permanently in a country

Deemed domicile - for IHT purposes only so UK domicile people are liable for IHT on worldwide properties but non UK domicile people are only liable for IHT on UK properties.

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11
Q

What if an individual chooses a new domicile then later abandons it?

A

Will revert back to domicile of origin

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12
Q

How do you qualify for being deemed domicile as a UK domicile person?

A

Been resident in UK for 15 out of last 20yrs

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13
Q

How long do you keep UK domicile after emigrating?

A

Atleast 5yrs

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14
Q

Tax liability types based on residence and domicile for arising and remittance basis

A

Arising basis
- UK tax paid as it arises on income and capital gains
- UK tax paid as it arises on foreign income & foreign gains

Remittance basis
- UK tax paid as it arises on UK income and capital gains
- UK tax paid on foreign income & foreign gains that it brings in (remits) to the UK

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15
Q

What is a remittance basis?

A
  • Individual is only taxable on UK income remitted (action of sending money)
  • Money, service or property brought in, received in, used by the UK for a relevant person
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16
Q

Remittance basis is not automatic for (3 rules)

A
  1. Adults who have been resident in UK for 7 out of last 9tax yrs - Must pay tax charge of £30K to qualify for remittance on tax
  2. Resident for 12 of previous 14 tax yrs - Must pay tax charge of £60k to qualify for remittance on tax
  3. Resident for 15 of previous 20 tax yrs - Not eligible for remittance on tax
17
Q

3 examples of when does tax remittance not apply?

A
  • If under 18
  • Foreign income and gains less than £2k
  • If individual is happy to be taxed on arising basis
18
Q

If a settlor is to an offshore trustee and the trustee if a UK resident but the trust is subject to UK income tax, what is the reason for this?

A

Trustee is UK resident