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Where Taxpayers and Advisers Meet

Non-dom arriver received bonus in UK

Lsp54
Posts:95
Joined:Tue Sep 15, 2009 5:11 pm
Non-dom arriver received bonus in UK

Postby Lsp54 » Tue May 26, 2015 4:08 pm

Hi,
My Australian client arrived back in the UK in November 2014, after being away for more than 3 years. He intends to stay for 2 years.

When working in Australia his employer was affiliated to the UK company that he subsequently joined when he arrived here.

In February 2015 he received a very large bonus which related to the calendar year January 2014 to December 2014. I am treating the first 10 months of this bonus as relating to when he was working and resident in Australia. The whole bonus was taxed in his UK payroll and the net proceeds paid into a US bank account.

My question is: Is he claiming the remittance basis for the overseas element of this bonus? Or is it exempt income whether remitted or not.

Thank you for any clarification.

LozaACCS
Posts:1504
Joined:Wed Aug 06, 2008 3:55 pm

Re: Non-dom arriver received bonus in UK

Postby LozaACCS » Wed May 27, 2015 8:06 pm

Using your basis of apportionment

The client was NR when it was earned
But UK resident when it was paid.

Clearly a RBU election cannot be made if the client was NR.
So given the connection between the UK and O/S employer I think greater scrutiny would be required of the terms governing the bonus, if it was always going to be paid then I would suspect the whole amount is taxable in the UK (on the basis that the client is resident in the UK) under S26 ITEPA 2003 but a RBU election can be made in respect of the overseas proportion (overseas workday relief) (S26A) ITEPA 2003.

If the bonus genuinely related to o/s duties and was independent of his return to the UK then that part would not be taxable, one wonders whether the continuation of the bonus having returned to a UK connected employer would be fatal to this argument.

Lsp54
Posts:95
Joined:Tue Sep 15, 2009 5:11 pm

Re: Non-dom arriver received bonus in UK

Postby Lsp54 » Thu May 28, 2015 11:28 am

Thank you very much for this considered response. I am in favour of treating the overseas split-year part of the bonus as non-taxable. I can find arguments for that. However if such uncertainty exists is it best to get a HMRC opinion first? Not sure this would be a good idea?
Any advice would be much appreciated.


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