Rich non-dom back to UK....

[Lost]

If a chap has been resident in Monaco for a few years, earned about £1m while there but now wants to return to the UK permanently whats he facing? - Surely the income he's earned abroad while not UK resident is protected?

If not, could he change the form of it somehow, ie invest in assets of some sort.

[Tax in Whitby]

Generally speaking, someone who has been out of the UK working for a period that covers a complete tax year is not chargeable to UK tax on income arising during the period abroad. So the Monagasque earnings should be outside the UK tax net. The problem is how to get the use of what has been saved. The bank account the savings are in should be closed before returning to the UK. It used to be common to open two offshore bank accounts, one for capital and one to receive the income arising on it, but whether this still works is in doubt. Your client (your friend?) (you?) will have to be very careful not to break the rules, because tax evasion has serious consequences.

It is very important to be entirely clear about status. You use the expression 'non-dom' in your heading, but you don't give any indication that the person is non-domiciled rather than non-resident. Someone who is both domiciled and resident in this country is chargeable to UK tax on world income. For people who are resident but non-domiciled foreign income is only taxable in the UK if either it comes to the UK in some way, shape or form or they elect not to pay the £30,000 'non-dom' charge.

You will see that this is a complicated area. Professional advice geared to the individual circumstances is essential.

[JSK TAXATION]

Lost,

It sounds like before the period of residence in Monaco the individual was resident in the UK.

If he/she left the UK, therefore, to take up a contract of full time employment in Monaco and the absence from the UK spanned at least one complete tax year then subject to meeting the qualifying rules about time spent back in the UK during this period, any earnings should be outside of UK tax. This principle would apply as much to earnings from a UK employer as it would from an overseas employer.

There are different rules for a self employed person and there are also issues if the employer is a company under the comtrol of the individual or any connected parties.

If you need further help please let me know. Kind regards,

John S King
Chartered Tax Adviser
www.taxation-advice.com

[JSK TAXATION]

Tax in Whitby/Lost,

TIW, our responses crossed.

Sorry, but I can't agree the latter part of your note. The individual's domicile is not relevant where a claim is made under the rule contained at para 2.2 HMRC booklet IR20, since if successful, the individual is treated as being not resident and not ordinarily resident.

The only relevance of his domicile would be if he couldn't claim under the above rule AND his earnings were from duties carried out wholly outside the UK for a non-UK resident employer.

If this was the case, then one would then have to look at previous periods of residence etc to see if the individual fell into the new regime as from 6 April 2008.

Kind regards,

John