Posted by Nick Day on 27 Nov 2013
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 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 put in place, non-domiciled individuals filing their tax returns on the arising basis, can legally avoid UK tax on earnings relating to non-UK workdays (for an initial period of two to three years) and on investment income/capital gains that arise outside the UK whilst they are resident here.
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 includes 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.
The following link takes you to our “top ten tax tips for expats moving to the UK” and gives outline details of the tax planning that is available for individuals transferring to the UK:
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 firstname.lastname@example.org.
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