Overseas aspects of personal tax Flashcards
Taxation of UK and Oseas income for IT
UK res and UK Dom:
UK income tax on arising basis
Oseas income taxed on arising income
UK Res non Dom:
UK Income - Arising basis
Oseas - Arising but may apply remittance basis
Non resident:
UK Income - Arising basis
Oseas - non taxable
Taxation of UK and Oseas income for CGT
UK res and Dom:
UK - Arising
Oseas - Arising
UK Res non dom:
Uk - Arising
Oseas - Arising but may apply remittance
Non res
UK - not taxable but exemptions
Oseas - Not taxable in Uk
Exceptions:
NR subject to CGT if:
Assets used in UK trade
UK L+B
Assets acquired when UK res but disposed during temp period of non residence
Determining residence and domicile
Residence :
Statutory residence tests (SRTs):
Consclusively oseas test
Conclusively UK test
Sufficient ties test
Domicile:
Actual domicile:
origin dependency or choice
Difficult to change
Deemed domicile - has actual domicile overseas but may be deemed UK Dom for IT and CGT
applies when either condition met:
1) UK R for 15 of previous 20 tax years
2) all 3 of;
1- UK R in current tax year
2- born in UK
3-Had UK domicile of origin
transitional rules - any individual who would be deemed UK domicile under 15/20 rules is not UK dom if not been UK res in any tax years from 17/18 onwards
Conclusively overseas test
deffo oseas res if:
Res in UK at least 1 tax year in previous 3 and present in UK less than 16 days
OR
Res in UK in none of prev 3 tax years and present in uk less than 46 days
OR
Full time work overseas FTWOS
Not UK res if any apply then move to UK conclusive test
Conclusive UK test
Deffo UK res if:
Present in UK for 183 days or more
OR
Only home is in UK i.e. period of 91 consecutive days which 30 in tax year
OR
Full time work in UK FTWUK
UK res if any apply otherwise go to sufficient ties test
Sufficient ties test (tests)
Family tie - Spouse/civil partner/child under 18 who is UK res
Accommodation tie - A place to live in UK for continuous period 91 days or more in tax year and spend at least one night in the tax year there
Work tie - work over 3 hours per day on at least 40 day in tax year
90 day tie - over 90 days present in UK in either or both of 2 previous tax years
Country tie (only if uk res in any of prev 3 tax years) - Present in UK more days than any other country
FTWOS
Work oseas 35 hours or more per week
AND
No breaks over 30 days
AND
less than 91 days present in UK
FTWUK
for a 365 day period, all or partly in the tax year, TP working at least 35 hours per week on average
AND
Worked in UK on more than 75% of working days
AND
at least one day in 365 day and the tax year where they worked in UK over 3 hours
Sufficient ties - days present - if uk red in any of prev 3 tax years - if not uk res in prev 3 tax years
how many ties to be met
Days present UK res Not UK res
16-45 at least 4 ties N/A
46-90 at least 3 ties all 4 ties
91-120 at least 2 ties at least 3
121-182 at least 1 tie at least 2
Remittance basis automatic application
remittance basis applies automatically
for a UK RES non UK Dom tax payer
where unremitted Oseas income and gains does not exceed £2k
tax payer retains their personal allowance and annal exempt amount
No remittance basis charge
Remittance basis claim
those eligible must decide whether to:
CLAIM:
Pay UK tax on foreign income and gains remitted to UK
paying £30,000 or £60,000 remittance basis charge
AND
Losing entitlement to PA and AEA
OR NOT CLAIM:
Pay UK tax on all foreign income and gains
Recieve UK PA and AEA
Avoid RBC
Exemption for certain remittances to UK
exempt from being treated as a remittance :
Funds brought to Uk to make loan or invest in shares in
UNQUOTED trading company (including AIM)
which is UK res or has UK PE -
FUnds must be invested within 45 days
OR
Assets brought into uk to be sold in UK
provided proceeds recieved by 1st Anniversary of 5 january following tax year in which property sold
and
proceeds taken offshore within 45 days of receipt
Overseas capital losses
If individual has NEVER used the remittance basis for capital gains, overseas losses are always allowable
in first year they use the remittance basis they can only obtain relief for overseas capital losses if they make an irrevocable loss election
if election made, must set UK and oseas losses against gains in following order:
1-against remitted oseas gains
2-Unremitted Oseas gains
3-UK Gains
if an election is not made in that first year - relief never given for oseas losses
election automatically no longer applies if the individual becomes deemed UK domiciled
Split year tax treatment
when does this arrise
indiv. normally UK res or non uk res for whole tax year
certain scenarios can split tax year to be resident for some and non resident for other
-Leaving the UK for FTWOS
-Leaving the UK with a partner who is going FTWOS
-Leaving UK and ceasing to have UK home
Splitting tax year - FTWOS
Split year of departure into 1) Uk res 2) non UK res
require following conditions:
1) be UK res in tax year of departure by virtue of SRTs
2) Be UK res in prev tax year
3) meet FTWOS conditions in the tax year of departure after started work oseas
4)Not be UK res in following tax year because they are FTWOS
Split year - coming to live in UK, startign FTWUK, ceasing FTWOS
Coming to UK:
Coming to live UK split year as res and non res if :
Starting full time work
OR
Returning to UK after ceasing to FTWOS
Starting to FTWUK:
TP coming to work UK, must be UK res by virtue of FTWUK and not have sufficient ties in UK before coming
considered UK res date they first start work
Ceasing to FTWOS:
split year possible if:
- UK res in year of arrival
2.Not UK res in previous tax year because FTWOS conditions met
- Have been res in UK in one or more of the four tax years immediately before the last full FTWOS year;
considered UK res only from the day after the period which satisfies FTWOS criteria
In exam state limits of ties test and FTWOS will be pro rated if working part of tax year oseas
Disposal of UK L+B by non res
if non res dispose of L+B
which was acquired from 6 April 2019 onwards
CG gain calculated as normal
however if before 6 April 19 - type of asset determines CGT treatment
UK residential property
rates
normal calc
elections
formula
since 6 April 2015 - NR indivs subject to CGT on disposal of UK res property at 18/24%
(CGT high rate 28% before 6 April 24)
Normal calc:
Proceeds - MV on april 2015
two elections to change method:
1) ignore rebasing and base gain on original cost
2) total gain on property is time apportioned with only post 5/4/15 gain taxable
(C-AxE/(D+E)
where
C = proceeds
A = OG Cost
E= ownership from 6/4/15 to disposal
D=ownership pre 6/4/15
Non res property and property rich assets
similar rules to res
Property rich asset = entity (usually company) in which non res has at least 25% stake and its gross assets are at least 75% from UK land
Liable to CGt at 10/20% on disposal
gain chargeable either:
1) Increase in value of property from MV at 6/4/19 to sale
2) By election - total gain based on original cost
CGT payment
normal - 31 Jan after tax year of disposal
shorter for UK L+B:
NON UK RES - residential and non residential = 60 days from completion
UK Resident:
- Residential = 60 days from completion
non residential = 31 Jan following tax year
as payment of tax is due before year end, payment is based on an estimate of taxable income and the use of losses and AEA
Temporary non residence
Where an individual :
Ceases to be UK res
Has been res in UK for at least 4/7 last tax years
is non res for less than 5 years
THEN THE FOLLOWING INCOME AND GAINS TAXABLE IN YEAR THEY RETURN TO UK:
- Capital gains and losses on assets acquired when UK res and sold while non-res
except where already taxed as disposal of UK L+B and property rich assets
- income taxed on the remittance basis which accrued during a period of UK RES but was remitted during period of temporary res
