14 - Personal tax - overseas aspects.

"Domicile of origin" definition:

Acquired by birth, normally domicile of father.

'Domicile of dependency' definition:

Up to age of 16. If father changes domicile, individual follows suit.

'Domicile of choice' condition:

Individual need to demonstrated severing all ties with UK (which might be unlikely if individual has child in the UK).

'Deemed domicile' conditions for I.T. and CGT purposes:

Long-term residents: UK resident for 15 of previous 20 tax years | unless not-UK resident in any tax year after 5 April 2017.

An individual will be resident in the tax year if he or she:

does not meet one of the automatic non-UK residence tests and meets one of the automatic UK residence tests | or meets one or more of the sufficient ties tests.

Automatic non-UK tests. An individual is the in UK in tax year less than:

16 days | or 46 and no UK-resident in any of last 3 years | or 91 days and works full-time abroad.

Automatic UK residency test. An individual is the in UK in tax year at least:

183 days in tax year, | or 30 days in tax year and only home is in the UK, | or 365 days continuously working full-time, some of which fall in the tax year.

Sufficient ties test:

Family| Accommodation consecutive-91| Work-40| Days in UK 90| Country

When considering residence status for sufficient ties what timespan is relevant?

An individual must be a resident within one of previous 3 tax years.

Split year basis (SYB) can apply if an individual is...

UK-resident under automatic or sufficient ties test (Non-resident cannot apply and will be non-resident for the whole year).

Split Year Basis when LEAVING the UK applies in the current year if the individual:

UK-resident in C.Y. | and previous year | and is not UK resident in following year | and leaves the UK part way through the current tax year for one of 3 specified reasons*.

Specified reasons for SYB when leaving UK:

Begins working full-time abroad. | Accompanies partner working full-time abroad. | Ceases to have any UK home.

SYB. When leaving the UK, the overseas part starts at:

At date start work abroad. | Later of date partner starts overseas work and joining partner. | Date cease to have a UK home.

Split Year Basis when ARRIVING in the UK applies in the current year if the individual:

is not UK-resident in C.Y. | and previous year | and arrives in the UK part way through the current tax year for one of 4 reasons:

Specified reasons for SYB when arriving in the UK:

Acquires a UK home. | Begins working in the UK for at least 365 consecutive days. | Ceases work abroad and returns to the UK. | Accompanies or later joins his partner in UK to continue to live with them.

SYB. When arriving in the UK, the UK period starts at:

Date acquires UK home. | Date start work in UK. | Date individual stops working overseas. | Later of date partner stops overseas work and joins partner in UK.

Income tax general rules for non-resident-not-domiciled:

Taxed on UK income only. | Personal allowance available against UK income for UK and EEA citizens.

Overseas income taxation of UK-residents but non-UK domiciled:

taxable (Arising basis or Remittance basis).

Resident but non-UK domiciled. Treatment if UNREMITTED overseas income and gains amounts up to £2000:

PA and AEA available. | Overseas capital losses available. | Saving nil rate band and Dividend nil rate band are unavailable. | Remittance basis is automatic. | All income taxed as non-saving income (including dividends).

Resident but non-UK domiciled. Treatment if UNREMITTED overseas income and gains amounts at least £2000:

Arising basis is automatic | but can elect for Remittance basis (decision made each year).| AEA and PA available.| Overseas losses allowable.

Consequences of Remittance basis election:

One election for both IT and CGT. | PA unavailable. | AEA unavailable. | Remittance Basis Charge possible*.

Remittance Basis Charge (RBC) is levied if individual:

Is not UK domiciled| is UK resident| has been resident for 7 out of last 9 years | and elects for the remittance basis to apply.

Overseas IT treatment:

Always top-slice.| Separate calculation for each source of foreign income.| Take out the source with the highest rate of overseas tax first.

CGT liability for non-resident regardless of domicile status general rule:

No liability on any assets, unless trading in UK or UK property.

CGT to UK-resident, but not domiciled general rules:

UK gains - arising basis. | Non-UK gains - possible remittance basis.

Lack of election for Remittance basis charge in context of overseas capital losses:

not allowable - now or ever

Election for Remittance basis charge in context of overseas capital losses:

Binding. | Irrevocable. | Overseas losses allowable.*

CGT liability of individual coming to the UK general rules:

Only taxed on gains made after becoming UK resident, | subject to domicile rules for overseas assets.

CGT liability of individual leaving the UK general rules:

If UK-resident for 4 of last 7 years tax years before leaving the UK, he remains liable to CGT even though no longer UK-resident if absent from UK | for less than 5 years. [The temporary non-residence rules]

CGT liability of an individual whilst abroad:

no CGT

CGT liability of an individual if return within 5 years:

Individual is liable on disposals of all assets whilst abroad | if the asset was owned before leaving in the UK or disposals after the date of return.

CGT liability of an individual if return after 5 years:

Individual is liable on disposals after the date of return only. No CGT on disposals whilst abroad, unless UK property.

Non-UK resident individuals are subject to CGT on the disposal of UK property after...

Disposals of UK residential property after 5 April 2015. | Disposals of UK non-residential property* after 5 April 2019. [Use MV at 5 April 2019 as deemed cost (or elect to use actual cost instead).

PPR for non-UK residents special rules for a periods of non-occupation:

If individual, spouse or civil partner stays in the property for at least 90 nights in the year - whole tax year is treated as a period of occupation. | If did not stay in the property for at least 90 nights - whole tax year as a period of non-occupation.

Allocation of AEA and capital losses against overseas gains tax computation treatment:

Allocated against UK gain first. Overseas gains treated as 'top slice' gain.

Deemed domiciled definitions:

An individual who ceases to be UK domiciled remains deemed UK domiciled for IHT purposes for next 3 years.| Individual who has been resident in UK for at least 15 out of 20 years, and for at least 1 of last 4 years, ending with the tax year in question.

Overseas status. Liability to IHT is determined by...

by domiciled, not residency.

Location of assets - Shares and securities:

Place of registration.

Location of assets - Chattels:

Location at time of transfer.

Location of assets - Life assurance policies:

Where proceeds are payable.

Location of assets - Interest in a business:

Where the business in carried on.

Individual leaving the UK is liable IHT on... assets for ... years after leaving UK (deemed UK domiciled).

on worldwide assets | for 3 years after leaving UK (deemed UK domiciled).

Individual leaving the UK if acquire a non-UK domicile of choice will only be liable on UK assets once...

once 3 years have elapsed.

Individual coming to the UK if acquire a UK domicile of choice is liable on worldwide assets when...

when become UK domiciled.

UK IHT on overseas assets formula:

Amount included in estate | × AER

SYB claiming procedure:

SYB applies automatically if conditions are satisfied; there is no claim to be made. | It is not possible to disapply the SYB.

Double tax treaty might provide tax double tax relief by... or by...

double tax relief by exemption*; | double tax treaty by credit**

Is BPR available for overseas asset?

Yes, BPR is available on worldwide assets. [note that APR is available only for UK and EEA properties]