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Non-Dom tax planning of global income after 7 years stay in UK

Vik
Posts: 1
Joined: Mon Mar 20, 2017 7:07 pm

Non-Dom tax planning of global income after 7 years stay in UK

Postby Vik » Mon Mar 20, 2017 7:13 pm

I came into UK for the first time on 13th October 2011 & have been a Tax Resident since then. I have been filing my returns as a UK Non-Dom on remittance basis since the tax year 2011-12 onwards.

I have other sources of income (primarily rental) in Dubai, which I don’t bring into the UK and hence have been tax free in the UK so far.

I understand that the tax year 2017-18 will be my last year in which I can file my returns as a Non-Dom (remittance basis) & that from the tax year starting 6th April 2018, I will have to either pay the non-Dom charge of £30K, (if I wish to not pay tax on my global income) or start filing returns as a UK domicile.

I am trying to plan my taxes & have some questions:

1) If I decide to leave the UK & become Non Resident: Would I have to leave the country by 5th April 2018 (and cut all ties) if I do not want to pay the £30k non-Dom charge or do I have some more time in the year 2018 to leave the country?

2) For how long (tax years or calendar years) do I have to stay away from the UK before I return back, so that I can get another 7 years of non-Dom tax benefit & also not have to retrospectively pay tax on overseas earnings for the years in which I was away. (I heard that there is some rule that I must stay away for 5 financial/ tax years)

3) I have only 1 self-occupied residence house in UK in which my family & I live? Do I have to sell it before 6th April 2018 to avoid paying Capital Gains tax on it or do I get some more time / leniency since I am moving out of the country. If I sell it after I become a Non-resident ie. later in 2018 or in 2019, will I have to pay Capital gains tax on it?

4) If I do not wish to relocate from UK: Is there any efficient way to reorganize my overseas assets, to not have to pay tax on their income in UK, if I decide to continue to stay in the UK in 2018-19 & beyond.(& of course not pay £30K as non-dom charge).

Many thanks for your advise in advance.
Kind Regards,

AnthonyR
Posts: 63
Joined: Wed Feb 08, 2017 2:33 pm

Re: Non-Dom tax planning of global income after 7 years stay in UK

Postby AnthonyR » Mon Mar 20, 2017 8:38 pm

If you are a non-dom that has been resident in the UK for 7 of the last 9 tax years then as you state, you have a choice of declaring income and gains on a worldwide basis or paying the remittance basis charge (RBC).

1. In order to avoid the above you need to be non-residence in the 7th year, which probably means spending less than 90 days in the UK in 17/18 (although it's complex so check the statutory residence test).

2. Basically you need to be non-resident for a tax year, but in theory could come back to the UK the following tax year, but you would then have the same issue the following year (ie being resident 7 of the last 9 years).

3. If the property has always been your main/only home then it is exempt from CGT.
If not - if you sell during a year you are resident you pay full tax (subject to PPR). If you sell during a year when you are non-resident you pay tax on the gain since April 2015 and if you return within 5 tax years you will pay the remainder on the return.

4. Yes - but it's probably beyond the scope of this forum, unless someone else wants to advise.

The other thing to bear in mind is whether the tax cost of the overseas income is sufficient to warrant relocating/restructuring?
Anthony Rogers CTA
Fusion Partners LLP
anthony@fusionpartners.co.uk

maths
Posts: 6473
Joined: Wed Aug 06, 2008 3:25 pm

Re: Non-Dom tax planning of global income after 7 years stay in UK

Postby maths » Mon Mar 20, 2017 10:57 pm

1. It is necessary to leave on or before 5 April 2018. Leaving on or after 6 April 2018 means satisfying the 7/9 tax year test and the £30,000 becomes payable (even if split year treatment applies).

2.
For how long (tax years or calendar years) do I have to stay away from the UK before I return back, so that I can get another 7 years of non-Dom tax benefit


3 tax years.

A return to the UK within 5 years triggers the temporary non-resident provisions. This may or may not prove problematic.

3. If the property has always been a main residence during ownership then no CGT charge arises if sold prior to losing UK residence. A non-UK resident is not outside the charge to CGT on sale of a UK property.The charge depends upon the method of computation adopted.


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