Chapter 5 Flashcards
Automatically not resident in the UK
The following individuals will always be treated as non residents:
• an individual who is in the UK for fewer than 16 days in the tax year
• an individual who was not resident for any of the previous three Taxi years and is in the UK for less than 46 days in the current tax year
• an individual who works full-time overseas (Defined as an average of at least 35 hours a week on an employed or self-employed basis)
Provided they are in the UK for less than 91 days in a tax year
Spend than 31 days in a tax year, working in the UK (a working day is defined as any day, where more than three hours of work are carried out)
Automatically resident in the UK test
- An individual who is in the UK for 183 days or more in the tax year
- An individual who has a home in the UK:
It is necessary to have the UK home for at least 91 consecutive days of which at least 30 days are within the tax year. For this test, only presence means being at the Home in person for any amount of time. It is not necessary to be present at midnight for the day to be counted. The Home does not have to be owned by the individual.
- An individual who carries out full-time work in the UK. It is necessary to work for 365 days, but only part of that period needs to be in the tax year.
Split year treatment
Individuals are normally either the resident or non-resident for a tax year. However, the year may be split into two parts in certain circumstances, including when a person:
- Leave the UK for full-time work overseas or comes to the UK for full-time work
- Leave the UK to live overseas, this must involve ceasing to have a home in the UK
- Comes to live in the UK, this must involve either coming to the UK for full-time work or meeting the only UK Home test.
The split ear treatment can also apply to a spouse or partner who accompanies or subsequently joints an individual who leaves the UK for full-time work overseas .
Sufficient UK ties test
There are five potential UK ties;
- spouse, civil partner, or minor children resident in the UK.
- Having accommodation in the UK of which use is made during the year. Generally it does not include a property that is let out, stays in hotels or short visits with relatives.
- Substantive work in the UK: This is defied as working for 40 or more days during tax year
- Spending more than 90 days in the UK during either of the two previous years.
- Spending more time in the UK than any other single country.
A person who has been resident during any of the previous three tax years will typically be someone who is leaving the UK. For them all five of the UK ties are relevant. A person who has not been resident will typically be someone arriving in the UK, and for them only the first 4 UK ties are relevant (they can ignore the country tie).
Deeming rule
Normally any day in which a person is not present in the UK at midnight does not count as a day of presence. However, this is subject to the teaching role which applies when a person has
Three or more ties for the tax year
Been present in the UK on more than 30 days without being present at midnight in the tax year -these are called qualifying days or
Been UK resident in one or more of the previous three tax years
All three conditions are met, the gaming role means that after the first 30 qualifying days, all subsequent qualifying days within the tax year are treated as days of presence.
Domicile of origin
In England and Wales, a child, usually take the farthest domicile. Illegitimate, children and children born after the death of their fathers take the mothers domicile
Follows that of the relevant parent until ages 16.
Deemed domicile
Since the 6th of April 2017, and individual who is not domicile in the UK, has a deemed domicile in the UK, if:
They are resident subject to that income actuals in the UK for at least 15 out of the previous 20 tax years . Deemed domicile status applying from the 16th year of residence or
They are born in the UK with a UK domicile of origin and return to the UK, becoming resident, having obtained a domicile of choice elsewhere. However, for inheritance tax purposes and individual only be dumb as out on this provision if they have also been resident in the UK in at least one out of the previous two tax years .
If deemed domiciled, an individual will generally be subject to income, tax capital gains and inheritance tax on exactly the same basis as someone who is UK domiciled.
Once an individual is deemed domicile under the 15 out of 20 years ago, then for income income tax and capital gains proposes, they will remain deemed the for further six years after they leave the UK
For IHT purposes, UK deemed to do status is lost once an individual has been non-resident for at least four consecutive tax year. When someone who has been actually UK or without immigrants to another country, then they are treated as keeping their UK domicile for IHG purposes for three years, are they actually acquire a dumbass out of choice in the foreign country.
Liability to tax of UK, domiciled individuals resident in the UK
• Income Tax is charged on worldwide earned investment income and cannot be remitted to the UK because of exchange control restrictions in the country of origin:
- Relief is available when overseas investments income cannot be remitted to the UK because of exchange control of restrictions in the country of origin.
• capital gains tax is chargeable on the realisation of chargeable gains made anywhere in the world.
• Inheritance tax is chargeable on gifts of assets, anywhere in the world, if the individual is domicile in the UK.
Liability to tax of UK domicile investments, not resident in the UK
There is no UK income tax liability on employment. Income for duties perform outside of the UK. Earnings for duty is in the UK remain taxable unless they are only incidental to the overseas duties.
Self-employed individuals are liable to income tax only on profits of a trade or profession carried on in the UK.
Investment income – there is no UK income liability on overseas investment income and all income from British government securities.
Other income – the UK state pension and other pension income are taxable except for pension income arising from employment overseas. Income arising from UK property is taxable.
Capital gains tax – individuals who are not resident in the UK are not usually liable to capital gains tax unless they are temporary non-resident.
• so an individual who leaves the UK must be resident outside of the UK for more than five years for disposals of assets acquired before leaving to be free of UK. Capital gains tax.
• in addition, a disposal is taxable when someone who is non-resident is carrying on a trade or profession through a branch or agency in the UK and dispose of asset used in that branch agency
Temporary non residents
Individuals are still liable for tax on any gains, realise on assess after departure from the UK if they:
Have been UK resident for four or more years out of seven Taxi immediately proceeding the year of departure (including parties under the split treatment)
Become not resident for a period of five years or less and own the assets before they leave the UK
Gains made by such a person in the tax year, in which she leaves the UK are chargeable for that tax year.
Gains made during years of non-resident are chargeable in the Taxi, in which the person resumes UK residence
Gains during years of non-residence on assets are required after becoming non-resident are exempt
The objective of these rules is to prevent people leaving the UK for a short period adjuster, realise a large gain and avoid the tax
Inheritance tax remains chargeable and gifts of assets, anywhere in the world, given that the individual is domicile in the UK .
