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Becoming Not Resident, Leaving the UK and Returning to the UK
The landscape of how to achieve a not resident status and how long you could remain not ordinarily resident in the UK has changed significantly over recent years. There have been a number of court cases that have been found in the Revenue's favour and these have all made it much more problematical for someone to be sure that their non resident status is secure.
Indeed, the Revenue have recently begun a consultation process over a statutory residence rule and also indicated that anyone spending more than 10 work days a year in the UK may not be in full time overseas employment. The latter of these can have implications for visiting the UK and remaining non resident.
We can help you find your way through the difficulties of becoming not resident and provide solutions where required.
If you are returning to the UK you need to take care to ensure your overseas earnings and savings are not unnecessarily subject to UK tax and again we can advise accordingly.
We can provide detailed reports and reviews of domicile. as well as advise on how to "achieve" a desired domicile, protect it and how best to benefit from it.
Be aware though that there are disadvantages to being not domiciled. Domicile is vital not only to understanding the liability to Inheritance Tax that your estate may have but also with regard to whether you can benefit from the remittance basis and control your income and capital gains tax liabilities.
There are three types of domicile and you can only be treated as having one of these at any one time.
- Domicile of Origin
- Domicile of Dependence
- Domicile of Choice
While it is possible to establish a Domicile of Choice and indeed lose it, it should not be overlooked that this is an area that regularly troubled the courts and detailed advice should be obtained.
Benefits of Non UK Domicile
Inheritance Tax - If you are not domiciled in the UK significant Inheritance Tax advantages can be achieved. However if married couples or (civil partners) have different domiciles there can be an immediate charge to IHT on the first spouse to die. This is compared to the position where both spouse have the same domicile and the surviving souse can inherit free for IHT.
Income & Capital Gains Tax - Income and capital gains tax advantages are also available if you can claim the remittance basis. The rules applying to this are particularly complicated and there is a "charge" of £30,000 if you want to take advantage of it.
The remittance basis (in very general terms) means that you only pay tax in the UK on income and gains that are used here. Needless to say the Revenue have wide ranging interpretations of what constitutes bring funds into the UK as well as the order in which they are remitted.