Chapter 20 - Employment Income and Residence and Domicle

Question 1

Residence

Answer 1

Generally, UK res people are liable to UK income tax on worldwide income, and they qualify for UK personal allowances.
Non UK res = UK tax on UK income, no PA unless from EEA
Residence decided by statutory res test.
Pass test if here for 183 days or more, if you have a home here, or have full time for for 365 days at least.
Generally res or non rest for whole year, but can be split year where starting to work overseas, or if someone comes to the UK to work
In order to be a Scottish taxpayer, an individual must be resident in the UK

Question 2

Domicile

Answer 2

Not defined by statute, is a concept of common law. You can only have one domicile. It is where you would most likely consider your perm home.
You get domicile of origin from your dad at birth.
You can acquire a new domicile of choice at 16
If your dependent changes domicile before you’re 16, your domicile changes too.

Question 3

Deemed Domicile

Answer 3

If someone is not UK dom, they are deemed to be where:

• they were born here and had a domicile of origin in the UK and are res in the tax year; or
• they have been res for the last 15 of 20 tax years

Question 4

Employees Resident and Domicile in the UK

Answer 4

Chargeable to tax on the full amount of any earnings received in the tax year, irrespective of any work done and paid abroad. Double tax relief will be available where some earnings are taxed abroad

Question 5

Employees Resident But Non-Dom

Answer 5

General position of UK income taxed on arising basis and foreign income taxed on remittance basis if claimed. They will get no UK PA.
If foreign income and gains >£2k, remittance basis applies automatically and they get a UK PA

Question 6

Employee UK Res but Non Dom - Foreign Employment Income

Answer 6

Can use remittance basis in 2 circumstances:
Earnings are taxed on remittance basis if the employee is a remittance basis user for the tax year where duties are performed and the tax year is on of the 3 tax years following 3 consecutive years of non-residence.
This is OWR. Earnings apportioned between UK and Non-UK duties. UK duties taxed on receipts basis, foreign income on remittance basis.
After 3 years, OWR ends and foreign income is taxed on arising basis if still UK res.
Remittance basis can still be used on foreign employer income paid for duties performed wholly outside UK.

Question 7

Employees Non-Resident

Answer 7

UK earnings are taxable at the point they’re received. Non-UK earnings are not subject to UK tax

Question 8

Summary

Answer 8

UK res & dom - all taxed receipts basis
UK res, non dom - UK duties receipts, foreign receipts, remittance if OWR or foreign employment income wholly from outside the UK
Non res - UK duties receipts basis, overseas not taxed