Overseas peronal taxation Flashcards
Who is treated as automatically NOT UK resident?
In the UK less than 16 days and has been resident one or more of prev 3 tax years
In the UK less than 46 days and has not been a UK resident in the past 3 years
Works overseas and is in the UK less than 90 days a year
Who is treated as automatically UK resident?
In the UK 183 days or more
Only home is in UK and they occupied that home for at least 30 days
Is in full time work in the UK of which some of a 365 day period falls within the tax year
What are the 5 ties?
Close family - Spoude / child
House in the UK which is available for 91 days and is used during the tax year
Doing more than 40 days of substantive work
Being in the UK for more than 90 days during either of the 2 previous tax years
If UK resident in any of previous 3 tax years and spends more time in the UK than any other place
When does split year treatment apply to individuals leaving the UK?
To begin full time work overseas
Where an individual moves overseas with a partner that they currently live with and the partner is moving overseas for full time work
Leaves the UK to live abroad and sells their house, spends minimal time in UK and establishes ties in new place
When does split year treatment apply to individuals coming to the UK?
Comes to UK, gets a home and does not have sufficient ties to the UK in order to be resudent prior to obtaining home
Comes to UK to work fulltime for at least a year and does not have sufficient ties before coming to UK
Returns to UK after a period that individual or partner has been working fulltime overseas
Domicile of origin is gained from
Father at birth
Domicile of dependency
If under 16 domicile of father changes then the domicile of child changes too
Even if an individual is not UK domicile they can be deemed UK domicile if one of these conditions apply
Formally UK domiciled
- Born in UK, has UK domicile of origin and is UK resident in relevant tax year
Long term UK residents
- Has been UK resident 15/20 of prior tax years
What is the effect on residency and dom on taxation? - If you’re a Non Resident
Taxed on UK income only
No PA unless a citizen of EUR
Gains not taxable (even if UK assets) unless used in a UK branch, UK land or temp non res
What is the effect on residency and dom on taxation? - If you’re UK dom and res
UK IT on worldwide income
If unremitted overseas income is less than 2k, the remittance basis is used (not taxable if not brought to the UK).
If overseas income is more than 2k the individual could
Use the arising basis
- Keeps UK PA and AEA
- Avoids remittance balance charge
- Pays UK IT on worldwide income as it arises.
Use the remittance basis charge
- Lose UK PA and AEA
- Pay RBC of 30k if UK res for 7/9 preceding years
- RBC increases to 60k if UK res 12/14 preceding years
- Only pays UK IT on income remitted to the UK
When is an individual charged based on the arising basis?
If they’re a UK resident and domiciled or deemed domicled
How are UK residents that are not deemed domiciled taxed?
Ont heir UK income only on the arising basis
If using remittance for overseas income then this income goes into the non savings income column as it loses it’s source nature which means the benefits os savings and dividends nil rate bands are lost.
When is there a remittance basis charge?
When remittance basis is claimed
Over 18
UK resident at least 7/9 preceding tax years
How much RBC is charged?
Depends on the length of time the resident has been in the UK
If they’vre been resident:
12/14 years - 60k
7/9 years - 30k
The remittance basis needs to be claimed each year.
Basically -
When claiming the remittance basis you only pay tax on what you bring over to the UK but you’re charged extra for it and do not get a personal allowance.
CGT - A UK resident and non UK Dom or DD will have relief for
Losses on disposals of UK assets as allowable losses.
If they have not claimed remittance basis, they are automatically given relief for losses on overseas assets as allowable losses.
An individual who has claimed the remittance basis must make an electrion to treat losses on assets outside of the UK
As allowable losses. Claim must be first set off against non UK gains in that year, then other Non UK gains and then UK gains.
The election must be made in relation to the first occasion when a non UK individual claims remittance basis for a tax year. If not done, the losses of that tax year and all future years will not be allowable.
CGT - Individuals who claim the remittance basis are not entitled to
The AEA
A non UK resident who makes a disposal of a UK asset is not generally chargeable
And therefore doesn’t generate a gain or loss. Unless it is from a Trade operated in a UK agency, UK land or they were temporarily non UK resident.
CGT - Trade operated through a UK agency. CGT applies where:
A non UK resident operates a trade through a UK agency or branch
There is a disposal of a UK asset which has been:
-Used in the purposes of the trade
- Used, held or aquired for the purpose of branch or agency
Non residential individual - CGT is due on the sale of land from/if
6th April 2015 if the land has residential building
6th April 2019 if non residential land. To calculate the gain you treat it as disposed of and reaquired at MV on 5th April 2019 (the base cost)
An individual who has UK land gains is entitled to
AEA
If a non resident generates a loss on land, it can be offset against
Current year land gains, future gains or past gains on death.
A UK resident is temnporarily non resident IF
The time between the date of departure and the day before return is less than 5 years.
The resident must have been a UK resident for at least 4 of the precvious 7 tax years before the tax year in which they became a non resident.
Any gains made in the non resident period will be chargeable/allowable
In the year of return (or split year period)
Non UK Resident Individuals - Rollover relief is available IF
The old asset is UK Land AND is a business asset and the new asset is also land for business
Non UK Resident Individuals - Gift Holdover relief
If the UK land is a qualifying asset for gift holdover relief, then gift holdover relief is available on a gift to a non UK resident individual. This is an exception because the Land remains chargeable to UK land
Double taxation relief is
The result of international agreements to avoid or diminish the problem
If an asset is aquired and sold during the non UK resident period but the resident returns to be a UK resident within 5 years of sale
There is no charge
What is the OECD model (Order for Economic Co-Operation and Development
A double taxation agreement with the provisions:
- Total exemption from tax is given in the country where income arises in the hands of visiting diplomat and teachers on exchange programmes
- Preferential rates of witholding tax
- DTR is given to individuals in their country of residence
- Exchange of info clauses so that tax evaders can be chased internationally
- Rules to prevent dual residence
- Clauses that render certain profits taxable in only one rather than both countries
- non discrimination clause so that a country does not tax non res more than res
If there is no relief available under double taxation the UK legislation provides
Unilateral relief.
DTR is always given on a source by source basis as the lower of:
- UK IT on gross overseas income
- Overseas tax on the same incomes
The UK tax is the difference between:
- UK tax before the DTR on all income in cluding o/s
- UK tax on all income except overseas income
Overseas income is treated as
The top clise of an individuals income.
If there is more than one source the individual can chose which clices to tax first
