Posted by Nick Day on 01 Aug 2014
Remittance Basis UK Tax Return Filing for “Non-Doms”
The “remittance basis” of taxation is a special method of filing UK tax returns that is only open to non-domiciled individuals, or to “non-doms” as they are often referred to.
UK Tax Return Filing for “Non-Doms”
UK domiciled individuals have to file their UK tax returns on the “arising basis”, reporting world-wide income and gains, but the remittance basis is available to UK residents that are non UK domiciled and means the taxpayer only pays UK tax on foreign income and gains that are remitted (brought) to the UK.
Providing the correct planning is undertaken, non-domiciled individuals filing their tax returns on the remittance basis, can legally avoid UK tax on earnings relating to non-UK workdays (for an initial period of two to three years after first becoming UK tax resident) and on investment income/capital gains that arise outside the UK whilst they are resident here.
Once a non-dom has been UK tax resident for seven out of the last nine (or twelve of the last fourteen) UK tax years they will be liable to pay the £30,000 (or £50,000) Remittance Basis Charge (RBC).
The UK has some complex “mixed fund” rules and hence it is important to seek advice in advance on how to set up non-UK bank accounts and investments in the correct way, so as not to “contaminate” funds that could perhaps be remitted to the UK on a tax-free basis, such as “pre-UK” earnings/capital.
Care must also be taken in tracking/monitoring remittances to the UK, which include cash transfers to the UK, asset transfers to the UK, and the use of credit cards and offshore loans depending on how these operate.
We have wide experience of tax planning in this area so if you are non-domiciled and would like to discuss how you might legally minimise your UK tax liabilities, please contact us for a consultation.
Top Ten Expat Tax Tips for Individuals Moving to the UK
The following link takes you to our article on the “top ten expat tax tips for individuals moving to the UK” and gives outline details of some of the tax planning that is available
Specialist Expat Tax Planning Services
Please click on the following link for further details of the services we offer to “Expats”:
Contact Tax Innovations
If you would like any advice regarding the above article or would simply like to discuss other ways in which we could help you or your business, please contact us on 01962 856 990 or email@example.com.
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