Ch 5 - Res & domicile Flashcards
What is the difference between residence and domicile?
Residence = status in any on tax year Domicile = permanent home
What makes someone automatically not resident in the UK?
- Less than 16 days in UK in tax year
- Not resident for the 3 prev tax years and have spent less than 46 days in UK in current tax year
- Full time work abroad, in UK < 91 days in tax year, < 31 days working in UK in tax year
What is considered full time?
35 hours p/week
What is considered a working day?
> 3 hours work
What make someone automatically resident in UK?
- In the UK for 183 days or more
- Full time work in UK
- Only home is in UK (owned 91 consecutive days and have been present in that home for min 30 days)
What is counted as a day of presence?
There at midnight
When may split year treatment be used?
- Leaves the UK to work fulltime overseas
- Comes to the UK to work fulltime
- Leaves to live abroad and has no homes in UK
- Comes to live in UK/meets the only UK home test
Does split year treatment apply to spouses?
Yes
What are the 5 sufficient ties tests?
- Spouse/civil partner/minor children in UK
- Accommodation in UK made use of during year
- 40 or more days work in tax year
- > 90 days in UK during either previous two years
- More time in UK than any other country
Residency for a tax year is determined by what?
Number of days spent in UK against how many ties they have
How many ties are required for a 16-45 days spent in the UK?
Resident: 4
Non-resident: Automatically not resident
How many ties are required for a 46-90 days spent in the UK?
Resident: 3
Non-resident: 4
How many ties are required for a 91-120 days spent in the UK?
Resident: 2
Non-resident: 3
How many ties are required for a 121-182 days spent in the UK?
Resident: 1
Non-resident: 2
How many days residency can be disregarded by HMRC in exceptional circumstances?
60
When will the Deeming Rule apply?
- 3 or more UK ties for the tax year
- Been present in the UK for 30 days or more without being present at midnight, known as qualifying days
- Been UK resident in at least one of the previous 3 tax years
What does it mean if someone meets the Deeming Rule conditions?
After the first 30 qualifying days, all subsequent qualifying days will be treated as a day of presence
Whose domicile do children normally take in England & Wales?
Usually takes the father’s domicile
A child’s domicile follows their parents until what age?
16
When does a domicile of choice occur?
Moving to new country with intention of permanently living there
When are you deemed a UK domiciled resident? (amount of years)
15 out of last 20 tax years
When a UK domiciled individual has domicile of choice in another country, they are still treated as being UK domiciled for a further how many calendar years?
3
An individual who is not domiciled in the UK is deemed domiciled in the UK if?
1) 15/20 years resident
2) Born with UK domicile and return, having obtained domicile of choice elsewhere
What are the tax implicates of somebody being deemed UK Domicile?
Liable to income tax/CGT.
IHT purposes = also been resident in the UK for at least 1 out of the previous 2 tax years
If someone is deemed domicile by the 15/20 years rule, then for income tax and CGT purposes, they will remain deemed domiciled for how many years after leaving UK?
6 years
For IHT, UK deemed domiciled status is lost once an individual has been a non-resident for at least how many consecutive years?
4
What is the liability to tax for a UK resident/UK domicile?
Income tax: Worldwide* (*eligible for remittance)
CGT: Worldwide* (*if deemed domicile 15/20 yrs rule, can rebase to market value)
IHT: UK & Worldwide
What is the liability to tax for a non-UK resident with UK domicile?
Income tax: UK = liable. Outside UK = not liable.
CGT: Generally not liable unless temporary non-resident. Liable on UK property.
IHT: UK = liable. Foreign = not liable.
When are income and gains treated as remitted to UK?
Bring them directly/indirectly to the UK so you or a relevant person can enjoy the benefits in the UK
What are the remittance exemptions?
- Personal effects
- Assets costing < £1000
- Assets brought into UK for repairing
- Assets in UK for < 275 days
- Art for public display
- Income and gains that are remitted to the UK for the purpose of commercial investment in a qualifying company
What is the annual tax charge?
Resident 7/9 years = £30,000
Resident 12/14 = £60,000
Does the annual tax charge apply to under 18s?
No
Unremitted gains are exempt from annual tax charge if less than?
£2000
If remittance basis is claimed, what allowances are not available/
Personal allowance & CGT allowance
If someone is UK domicile and UK resident, what are the rules with CGT?
Liable on worldwide gains
If someone is UK domicile and not-UK resident, what are the rules with CGT?
Not liable unless temporary non-resident excluding property)
If someone is non-UK domicile and UK resident, what are the rules with CGT?
- Liable on UK gains and gains remitted to UK
- If no remittance, worldwide gains
If someone is non-UK domicile and non-UK resident, what are the rules with CGT?
Not liable unless temporary non-resident excluding property)
What is the IHT treatment on UK assets if UK domicile?
Liable
What is the IHT treatment on foreign assets if UK domicile?
Liable
What is the IHT treatment on UK assets if non-UK domicile?
Liable
What is the IHT treatment on foreign assets if non-UK domicile?
Not liable
Is resident status relevant to IHT?
No - except in determining deemed domicile
Under self assessment, who is liable to determining domicile status?
The individual
No tax return is required if overseas employment income is less than?
£10,000
The non-residence supplementary pages must be completed if an individual considers themselves to be what?
- Not UK resident
- Resident in the UK for only part of the tax year under split year treatment
- Not domiciled in the UK and it is relevant to their income tax or CGT liability
What happens if the non-residence pages are not completed on a self assessment return?
Treated as UK resident/domiciled and must declare worldwide income and gains
What is double taxation relief?
Most double taxation treaties lay down a process for determining a single residence where an individual may be considered resident in several countries
Residents in an overseas country may qualify for an exemption from UK tax on what?
- Earnings from employment carried on in the UK
- Profits or earnings for independent, personal or professional services carried on in the UK
An individual who is a resident of a country with which the UK has a double tax treaty may be able to claim what?
claim an exemption from UK tax on some types of income and gains from UK sources
Non-residents generally pay what on any dividends they have received?
Generally do not pay UK income tax on dividends
How can double taxation treaties affect CGT paid?
- (Disposal outside UK) If a gain arises in country where a double tax treaty is in place with the UK, it will not be subject to UK CGT, even if the individual is a UK resident
- Make foreign tax credit against UK tax (if foreign > UK, excess cannot be repaid)
When are offshore trust subject to UK income tax?
When trustee is UK resident
What CGT is an offshore trust subject to?
Not subject to UK CGT, but anti-avoidance legislation can result in the gains being taxed on the settlor or beneficiary in the same way as above
