Residency

Question 1

What are the 3 components of the Automatic Overseas Test

Answer 1

• resident in UK less than 16 days in tax year and resident in one of three last tax years
• Not resident in UK last 3 tax years and less than 46 days in current tax year
• Working abroad and spent less than 91 days in UK in current tax year and less than 31 days working 3 hours or more in UK

Question 2

What are 3 components of Automatic UK test

Answer 2

• Resident more than 183 days in tax year
• had a home in UK for 91 days, of which 30 fall in current tax year. Been present in home for 30 days. If overseas home, not present for more than 30 days
• Full time work in UK

Question 3

What is the sufficient ties test (5)

Answer 3

• Spouse or minor child in UK
• Accommodation inn UK at some point. Living there for some of time
• Substantive work in UK for more than 40 days
• Working in UK. 40 0r more days substantive work in UK
• Time spent in UK in previous tax years - 90 days or more spent in UK in either of last 2 tax years
• Time spent in UK relative to elsewhere - more days spent in UK in tax years than in any other single country

Question 4

What is Remittance Basis

• Charges
• Exemptions (7)
• Charge doesn’t apply to …(3)
• How is charge paid and how often

Answer 4

• Individuals who are UK resident 7/9 previous tax years - £30,000
• 12/14 - £60,000
• Exemptions = 1)Personal effects 2) items cost less than £1k 3)assets in UK less than 275 days 4)works of art 5) income and gains remitted to invest in qualifying co. Unlisted/AIM

If they are domiciled somewhere other than UK, have income or gains outside Uk and choose to send some or all toUK because resident in UK
By claiming remittance, they only pay tax on assets and income remitted (not worldwide)
They lose Personal & CGT allowance

Question 5

Jacques (Canadian) has lived and worked in UK for past 11 years. How will his income and gains be treated for tax purposes

Answer 5

• taxed in UK on worldwide income and gains
• unless elects for Remittance basis
• As UK res for 7/9 years = £30k tax charge if uses remittance
• If unremitting income less than £2k - No charge
• Still taxed on UK income & gains
• If taxed on remittance basis, loses PA and CGT exemption
• Election made annually
• Annual charge increase to £60k next year (12/14)

Question 6

Who still qualifies for a Personal Allowance, even if UK non resident

Answer 6

• UK Citizens
• EEA National
• Employed by Crown/ Missionary Society - inc spouse
• Late spouse in service of Crown
• Employed in service of any territory under HM protection
• IOM.Channel Islands
• Previous residents / Health / Family

Question 7

Who are classed as:

• Leaver
• Arriver

Answer 7

Leaver - Someone has been resident in UK for any of last 3 tax years

Arriver - Someone who has not previously been resident in UK

Question 8

WHat’s difference between UK Domicile and Non UK Domicile relating to IHT

• Explain
  Domicile of origin
  Domicile of choice
  Deemed Dimicile

Answer 8

UK Domicile - Liable to IHT on all assets, whether in UK or not (worldwide assets)

Non UK Domicile - only liable to IHT on UK assets

Domicile is a much more permanent thing - where you would return to after a holiday

• Domicile of Origin. Born with. Usually father.
• Domicile of choice - replace origin by moving permanently abroad and taking action to shops intention to stay ( sever ties with old country, buy property, sell UK property, set up business/ get job, involved in community, become citizen or national)
• Deemed 1) resident in UK 15/20 last tax years 2)Born in UK with dom of origin, acquires Dom of choice elsewhere, then returns to UK.
  Once deemed domicile, they are generally treated as if they were domiciled in UK
  remain dimicile for income & CGT purposes for 6 years after leaving UK
  For IHT its 4 years
• Even if individual does replace UK Dom with Dom of choice, HMRC still treat as UK Dom for at least 3 years

Question 9

Income Tax

• UK resident + UK Dom
• UK Resident + Non UK Dom
• Non UK Resident + UK Dom
• Non UK resident + Non Dom

Answer 9

• UK Res + IUK Dom = All earned & investment income worldwide - 100% foreign pension
• UK Res + Non Dom = UK Income fully taxable, Employment income fully taxable
  Remittance - investment income outside UK, Employment income from foreign employer and duties overseas, most foreign pensions, S/E outside UK

Non UK Res + UK Dom = not paid on earned overseas income or overseas investment income or gilts: paid on UK earnings, SE earnings, UK investment income, UK state pension

Non UK + Non Dom = income tax on UK investment income, employment in UK & property income

Question 10

CGT

• Uk resident + UK Dom
• UK Resident + Non UK dom
• Non Uk resident + UK Dom
• Non UK resident and Non UK Dom

Answer 10

• UK Res + UK Dom - All worldwide gains and paid remittance charge before April 2017, gains rebased to 5 April 2017
• UK Res + Non Dom = Liable on all UK gains: Liable on foreign gains if remittance basis. if no remittance used = worldwide gains
• Non UK Res + UK Dom = Only UK property gains. Must be non resident for 6 tax years
• Non Reds + Non Dom - only UK property

Question 11

Remittance basis

What are areas impacted

Answer 11

• no PA
• no CGT AEA
• £30k charge 7 out of 9 tears
• £69k. 22 out of 14

Question 12

UK resident but non Dom

Do not have to pay tax if (2)

Answer 12

• less than £2k

- Don’t bring into UK

Question 13

Domicile morning of choice

In order to change, what 2 things must apply

Answer 13

• Permanently settled

- intend to stay

Question 14

inheritance tax

Non Dom

When will HMRC treat a non Dom ad being UK Dom (2)

Answer 14

• lived in Uk 15/20 tax years

- permanent home in UK any time in last 3 years of life