A non-domiciled individual can be described as an individual who is resident in the UK for an indefinite period with no intention of remaining in the UK. A domicile can be described as more than residence and has often been described as where the heart is at. The term domicile is not defined in a statute, however, a person can be deemed UK domiciled if they have stayed in the UK for a long enough period. This applies if:
- The individual has been tax resident in the UK for 15 out the last 20 years or.
- The individual was born in the UK with a UK domicile of origin and is now tax resident in the UK.
If you are deemed UK domiciled then the tax effects are same as having a actual UK domicile.
What are the effects of being non-domicile?
Non-domiciles get the following tax breaks
Generally a UK resident individual is subject to tax on their worldwide income and capital gains. However a non domiciliary can make a claim for the remittance basis which means only UK income and gains as well as overseas income and gains remitted to the UK are taxable. This essentially means if overseas income is left in a foreign bank account no tax is payable in the UK until the money or assets representing that money are transferred to the UK subject to certain conditions & exemptions.
There is a charge of £30,000 per an annum to use the remittance basis if you have been UK resident for 7 out of the last 9 tax years of UK residence and £60,000 if you have been UK resident for at least 12 of the last 14 years.
There may also be a restriction of personal allowances when claiming the remittance basis and therefore a detailed calculation would need to be carried out to confirm if it is beneficial to claim the remittance basis each year or not.
There is no remittance if exempt property is remitted to the UK. Exempt property includes:
- Clothing footwear, jewelry and watches that have been acquired with foreign income or gains and are for personal use.
- Assets derived from foreign income or gains with a value of less than £1,000.
- Property that an to the UK for less than 275 days cumulatively.
Here at Emulous Accounting we specialize in the taxation of non-UK domiciliary and can help by:
- Providing a detailed assessment of your current UK residence status.
- Advice on whether you should pay tax on an arising basis or a remittance basis.
- Provide advice on how to reduce your tax bill.
- Prepare and submit your tax return to HMRC.
For more detailed information and to arrange a free consultation, please contact us.