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Advanced Tax > Topic 9 - Overseas > Flashcards

Topic 9 - Overseas Flashcards

1
Q

Define Domicile status

A

The country that a person treats as their permanent home, or lives in and has a substantial connection with.

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2
Q

What are the 4 types of domicile?

A

Of origin:
Domicile fathers birth place / permanent home of father.

Of Dependency:
Until aged 16 - dependant on father. If he changes so does dependant.

Deemed Domicile:
Long term residents ( 15 out of previous 20 tax years)
Formerly Domiciled residents. (Born in UK + domicile of origin UK+ UK resident in tax year)

Of Choice:
From 16 yrs old
- Must sever all ties with old country
- Clear intention to settle in new country on permanent basis.

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3
Q

Define Residence (3 steps)

A
  1. Automatic non residency test
  2. Automatic residency test
  3. Sufficient ties test.
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4
Q

What is the automatic non residency test?

A
  • In UK less than 16 days
  • In UK less than 46 days AND Non UK resident in 3 previous tax years
  • Works full time overseas and is in UK for less than 91 days in year.
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5
Q

What is the automatic residency test?

A
  • In UK for 183 days or more in tax year
  • 30 days in UK and only home in UK
  • Carries out full time work in the UK.
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6
Q

What are the 5 sufficient ties?

A
  1. Close family (spouse or minor child)
  2. Present in UK for > 90 days in either of two previous tax years.
  3. A house in UK used during the year.
  4. Doing substantive work in UK
  5. Spending more time in UK than any other country (only applies to someone leaving UK)
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7
Q

When would a split tax year occur?

A

If an individual is deemed to have a different tax status for part of the year.

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8
Q

When would a split tax year apply for arrival in the UK?

A

Individual must be a UK R in current year AND not UK R in previous year:

UK resident from date:

  • Acquires UK home; or
  • Begins full time work; or
  • Ceases work abroad (returning to uk)
  • Come to UK to join partner after ceases work abroad.
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9
Q

When would a split tax year apply for leaving in the UK?

A

Individual must be:
UK R in current year
UK R in previous year
Not UK R in following year

Non UK R from the date:

  • Begins full time work abroad
  • Moves overseas to join partners working abroad.
  • Ceases to have UK home.
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10
Q

When leaving the UK to work abroad/ accompany a partner working abroad the split tax year will only apply if no more than the permitted number of days are spent in the UK after departure. What are the permitted days?

A

< 91 days per annum (proportioned depending on departure date)

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11
Q

When ceasing to have a home in the UK, split tax year will only apply if the individual spends < how many days in the UK?

A

< 16 days and establishes ties in the overseas country.

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12
Q

State the basis of assessment for IT for:

UK R UK Dom

A
  1. UK Income taxed on arising basis
  2. Overseas income taxed on arising basis
  3. Personal allowance available
  4. Double taxation relief available.
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13
Q

State the basis of assessment for IT for:

UK R - NOT UK Dom

A
  1. UK income taxed on the arising basis.
  2. Overseas income on the remittance or arising basis depending on situtation.
  3. Double taxation relief available.
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14
Q

State the basis of assessment for IT for:

Not UK R

A
  1. UK income taxed on arising basis.
  2. Overseas income not taxabe.
  3. PA available if national of UK, EEA, or a resident of Isle of man or Channel Islands.
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15
Q

Define remittance basis

A

Foreign income is taxed if it has been brought in to the UK.

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16
Q

For the remittance basis for UK R but non UK Dom, what are the two steps to consider?

A
  1. < £2,000?

RB automatic
PA available.

  1. > £2,000 Assessed on Arising basis with PA available.

BUT
Election can be made for RB - each tax year.
Impact:
Income tax on remitted income
PA NOT available
If LT resident there’s a remittance charge.

17
Q

What is the remittance charge?

A

If LT resident:
£ 30,000 if R 7 out of last 9 tax years.
£60,000 if R 12 out of last 14 tax years

(over 18’s only)

18
Q

If income is taxed on RB, what are the rates of IT?

A

Taxed as NS income 20/40/45 %

No savings/dividend NRB available.

19
Q

When would DTR occur and how does it work?

A

Occurs when an individual is taxed in two countries and there’s not treaty.

DTR deducted from income tax liability

20
Q

How do you calculate DTR?

A

Overseas income included GROSS.

Relief:
Lower of Overseas withholding tax suffered
vs
UK income tax on that overseas income.

Overseas income - top slice
Calculate income tax inc overseas
Calculate income tax without overseas
Difference = UK income tax on that overseas income

21
Q

State the basis of assessment for CGT:

UK R UK Dom

A 
UK gains taxed on arising basis
Overseas Gains taxed on arising basis
Overseas losses allowable
AEA available
DTR
22
Q

State the basis of assessment for CGT:

UK R Non UK Dom

A

UK gains taxed on arising basis

Overseas gains on remittance OR arising basis depending on situation

23
Q

State the basis of assessment for CGT:

Non UK R

A 
UK and overseas gains exempt
Exceptions:
- Temporary absence abroad
- Disposal of a trade asset
- UK property
24
Q

CGT - UK R but non UK Dom. Remittance basis rules.

A

< £2,000 gains taxed on RB (no choice)
AEA available
Overseas losses available
DTR

> £2,000
Overseas gains assess on arising basis
AEA available
Overseas losses allowable

BUT;
election for remittance basis each tax year - one election for both IT and CGT.

- Gains taxed if remitted. Where proceeds remitted, gain deemed to be remitted first.
AEA not available
Remittance Charge:
- £30k if  R 7/9 last tax years
- £60k if R 12/14 last tax years

If RBC applied, gains taxed 20% (28%) regardless of other income.

25
Q

Overseas losses and the elections for the remittance basis.

  1. Consequence of no election?
  2. Losses election
A
  1. Will lose right to claim overseas losses now and in future.
  2. Irrevocable - must elect first time RB is claimed. Can relieve losses now and in future.
26
Q

When would Temporary absence abroad be triggered?

A

Individual was UK resident in 4 or more of the 7 tax years immediate preceding the tax year of departure, AND

The period of non Uk residence is 5 years or less.

27
Q

What are the tax implications of a disposal of a UK residential property by a non-UK resident?

A

Only gains occuring after 5.4.19 are chargeable
Where property is acquired pre 6.5.19 two methods of calculating gain.

  1. MV at 5.4.19 instead of cost (automatic)
  2. Elect for whole gain or loss using original cost

Losses can be offset with gains if individual becomes UK R.

28
Q

How does the disposal of a UK residential property by a non-UK resident interact with temporary absence rules?

A
  • Disposal when NR: apply rules to calculate gain chargeable; then
  • balance of the full gain (original cost) is charged when R regained

Advanced Tax (23 decks)

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