Coming (or coming back) to the UK to work?
If you have been living or working overseas and are planning on coming/returning to the UK, it is important that you tie up all the loose ends and deal with your international tax affairs first, and then secondly, prepare for your tax obligations in the UK.
Coming to the UK lends much weight to the well known saying “Failing to plan is planning to fail”. This is probably a once-in-a-lifetime opportunity to get the tax planning right, before you arrive in the UK. Once you arrive you may well unintentionally give yourself a tax liability that could have been avoided.
With our international expertise, we can offer specialist support and cross-border tax planning for:
- UK residents
- Non-domiciled ex-pats living in the UK
- Non-UK residents moving to the UK
- Non-UK residents setting up a business in the UK
- British ex-pats living abroad
Residence and Domicile – Recent developments
The new “Statutory Residence Test” (“SRT”) came into effect on 6th April 2013. This determines with greater certainty than before whether an individual is UK tax resident or not. There is an “Automatic Overseas” test, an “Automatic Residence” test and if neither is conclusive, a “Sufficient Ties” test. As tax residence is critical in determining both your UK and overseas tax obligations, it is vital to know whether you are UK (or overseas) tax resident and, for people coming/returning to the UK, when the period of UK tax residence commences.
Individuals who are UK residents but non-domicile may exercise the option to be taxed on the “remittance basis”. However, once they have been tax resident for 7 out of the last 9 years, they must pay the annual “Remittance Basis Charge” or “RBC” of £30,000 for this privilege. The RBC increases to £60,000 if the period of UK residence is more than 12 out of 14 years, and to £90,000 if more than 17 out of 20 years.
There are two exemptions from liability to the RBC. Firstly, there is an annual upper limit of £2,000 of unremitted foreign income and gains per taxpayer. Secondly, remitted incomes or gains invested in a qualifying UK trading company are exempt from both the RBC and from UK income tax and capital gains tax. There are conditions attaching.
Consultations are currently in progress regarding certain important changes to our domicile laws and to the remittance basis. Advice should be sought on the possible future impact of these.
Re-locating or planning to work overseas?
If you are planning to re-locate overseas, either on a time-defined international employment posting or to live longer-term, the tax issues can be numerous and complex. Making sure you have very velar understanding of your tax obligations is absolutely essential.
There is a significant amount of “pre-move” tax planning that should be considered to mitigate both your UK and foreign taxes. We work closely with international associates in many countries via our membership of GGI.