Following on from my article at the end of November: Watch Those Trips To The UK, today I read another interesting article about the tax implications of being considered ‘resident’ in the UK.

The key point in the previous article was that the government plans from April to change the residency rules. “At present, if you are in the UK for more than 90 days a year, you will be considered resident. But you do not have to count the arrival and departure days.” However the pre-budget report contained plans to change this so that days of arrival and departure would need to be counted. This would give those who undertake regular trips to the UK far less time than now before they become considered ‘ resident’.

The importance of all this is the financial implications as the Government is also planning to change the way that ‘resident’ and non-domiciled individuals are taxed which will have an impact on expats.

Currently anyone resident in the UK pays tax on their worldwide income and gains in the year that they arise, but the remittance basis is an alternative tax basis. This allows expats and others who are considered ‘resident’ but who are not normally domiciled or ‘ordinarily resident’ in the UK to delay the payment of tax on their offshore income. They would pay tax normally on UK-sourced gains, but would not pay tax on off-shore income until it was brought back or remitted onshore.

The change planned is that from April to keep the benefit of this remittance basis people will have to pay a 30,000 a year fee to the government! The alternative is to have ALL your income taxed as it arises. It is important to make the right choice as anyone opting to pay tax using the remittance basis will not only have to pay the fee but will lose their personal tax allowances.

This all seems quite complicated, and of course the alternative would be to avoid ‘resident’ status in the UK. To read more click below:

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