Choice of domicile, implications for remittances

by **Downtown Boy** on Sun Jan 08, 2012 3:43 am

As a German national, I'd like some pointers for consideration in the choice of becoming non-domiciled and implications for remittances to the UK:

In the tax year of 2010, I moved to the UK in mid-May 2010 to take up permanent employment with an annual gross salary of £ 102K for that tax year.
For the months of April and May, I also received a net income of €15K in the Netherlands (where I used to work the previous 10 years). Over the remainder of that tax year, I made remittances of app £100K from those two months' Dutch income and prior savings into my UK account to accumulate funds for a property purchase in the UK in May 2011.

Q1: Am I better off claiming domicile or non-domicile basis?
Q2: If I go for a non-dom basis, can I still claim PA on the UK income for 2010/11 (given I left less than £2K of Dutch income abroad)?
Q3: Are remittances made to purchase property in the UK (as the only/main residence) applicable for exemptions from UK tax?

I am basically leaning towards claiming non-dom status and RB, if I can still avail of PA and exemptions on remits due to property purchase here, if eligible. Thanks for any recommendations!

by **mullet** on Sun Jan 08, 2012 3:00 pm

You can't just choose your domicile at will. A few questions, which are neither prescriptive nor exhaustive in thinking about your domicile:

Where were you born?
Where was your father born?
In which country(ies) do you hold a passport?
Where do you own property?
Where is your permanent home? Do you own it?
Where are your spouse/children living?
Where do you have business interests?
Which country's law govern your will?
Where do you plan to live permanently or indefinitely?

Also have a look at HMRC6. http://www.hmrc.gov.uk/cnr/hmrc6.pdf

by **mullet** on Sun Jan 08, 2012 3:03 pm

Forgot to say, my comments were aimed at you thinking about where you may or may not be domiciled - in view of your arrival in the UK preceded by 10 years in The Netherlands. Only then can you consider the costs or benefits of claiming non-dom status. It may be simple, but depending on certain factors your domicile may not be where you think it is (hope that makes sense).

by **Downtown Boy** on Sun Jan 08, 2012 3:26 pm

In this age of global citizenship, the anwers to those questions are not unanimous

Of 9 questions, country A got 4, B got 3, C got 2 (B=UK). Are any of the questions more weighted than the others? :geek:

Thanks for the response!

by **mullet** on Sun Jan 08, 2012 3:45 pm

No, the questions are not really weighted. In certain circumstances different questions can be of greater or lesser relevance. Domicile is complicated.

<Puts on cynical hat>
Just give it a few years and we will all be domiciled in the USE (United States of Europe) so this might not be an issue!

by **Downtown Boy** on Sun Jan 08, 2012 5:05 pm

Ok, I throw in the towel...

Are there any tax advisors in London who can help with SA for ND and international tax expertise (Germany) on a fixed fee basis? :?:

by **maths** on Tue Jan 10, 2012 4:45 pm

Prima facie, you are non-UK domiciled and tus eligible for remittance basis treatment.

If for tax year 10/11 of your foreign income/gains (which would include interest on foreign deposits) arising in 10/11 less than £2,000 remains overseas then remittance basis applies automatically unless you specifically disclaim such treatment.

Loss of personal allowances does not occur if you satisfy the "less than £2,000" test.

There is no exemption for remittances used to buy UK house/flat.

Difficult to see major benefit of remittance basis if only £2,000 of 10/11 remains overseas?