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Nicola-mod
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I am an EU citizen living in the UK, and am contemplating acquiring

Customer Question

I am an EU citizen living in the UK, and am contemplating acquiring UK nationality. Is there any downside in doing it from a tax perspective?
Submitted: 3 years ago.
Category: Tax
Expert:  Sam replied 3 years ago.

Hi

 

Thanks for your question

 

Can you advise how long you have lived in the UK and what income/investments you have outside of the UK, and of those, which income and earnings from investments are brought into the UK.

 

Thanks


Sam

Customer: replied 3 years ago.
5 years in UK
I have some investments abroad, none of which have been brought back. I am resident and non domiciled.
Expert:  Sam replied 3 years ago.

Hi

 

Thanks for your response

 

As you state you are non domiciled, I assume you are taxed under the remittance basis, which sees you having the right to not declare unremitted income into the UK 9such as interest and dividends, rental income etc )

 

But if any of the income earned is brought/spent in the UK then these are liable to UK tax and should be declared (and any foreign tax suffered also claimed to reduce the UK tax liability)

 

And of course of this income from investments is in excess of £2000 then you should be declaring remittance basis to the UK tax office (HMRC) on the annual self assessment tax return as this will result in you losing your entitlement to personal allowances. But I assume you have all of this in order.

 

But if you attain UK nationality then you will be liable to tax on the arising basis, which means ALL worldwide income has to be considered for UK tax, but you can then also claim foreign tax suffered so you do not suffer tax twice (in essence) on the same income) And when you also consider that within the next 2 years - you would be liable to a remittance basis charge if you remained claiming remittance basis, because you would have achieved a stay of 7 out of the last 9 years, this would then result in a charge of £30,000 a year. So you would need to change over to the arising basis anyway.

So within the next two years you would from a tax perspective, be in the same position that you would be applying for UK citizenship.

 

Do feel free to ask any follow up questions, but it would be appreciated if you could rate the level of service I have provided, as this ensures I am paid by just Answer.

 

Thanks

 

Sam

 

 

Customer: replied 3 years ago.
So from what you are saying UK non domiciled nationals cannot be taxed on remittance basis? Do you mind posting relevant rules regarding that?

Are you sure there are no other things to consider? Eg moving abroad and UK claiming my ties to the country haven't been severed enough? Anything relating to pensions? Please post relevant cases regarding that as well. Thanks.
Expert:  Sam replied 3 years ago.

Hi

 

Thanks for your response

 

If you apply for UK citizenship, then you will not be treated as non domiciled, you will then be treated as a UK resident and liable to tax on the arising basis like any other UK citizen for as long as you remain living in the UK?

At a current non UK domiciled citizen you have the right to choose how your foreign income is treated, as you have chosen to be taxed (I assume) under the remittance basis as

1) You do not declare your non UK income

2) Either have income less than £2000 or if over £2000 have had your UK personal allowances removed.

 

If you become a UK citizen, then you will not be treated as a non domiciled individual, as for all the time you remain living in the UK, you will need to declare all worldwide income.

 

That was the basis of your question was it not ?

 

If you move abroad then you are not resident so are not liable to UK tax anyway on foreign income but might have UK tax arising on continuing UK income (although there is scope to have this paid tax free in the UK in some instances) - but your question asked " am an EU citizen living in the UK, and am contemplating acquiring UK nationality. Is there any downside in doing it from a tax perspective? " And its on that basis I have answered your question, and then also offered further advise regarding your position of having lived in the UK for 5 years, and what that will mean for you if

1) You do NOT apply for UK citizenship and

2( Continue to be consider as liable to tax on your foreign income under the remittance basis.

 

Is this NOT what you are asking? As you now are asking regarding leaving the UK and severing ties - I am very confused.

 

I have added a link that covers all the rules here http://www.hmrc.gov.uk/international/remittance.htm

 

Regarding the new question regarding pensions - perhaps we could address this when we have established the first question asked.

 

Thanks

 

Sam

 

 

 

 

 

 

 

Customer: replied 3 years ago.
Relist: Inaccurate answer.
Expert:  Sam replied 3 years ago.

Hi

 

May I ask what aspect you feel is inaccurate?

 

If you could clarify what is was you needed to know then I would be happy to advise further

 

Thanks


Sam

Customer: replied 3 years ago.

UK nationality doesn't automatically mean UK domicile. HMRC is clear on that in multiple guidance documents. So that answer is inaccurate.

Customer: replied 3 years ago.
Relist: Inaccurate answer.
Customer: replied 3 years ago.

Do you mind opening up the question to other experts? Thank you.

Expert:  Nicola-mod replied 3 years ago.
Hello,

It seems the professional has left this conversation. This happens occasionally, and it's usually because the professional thinks that someone else might be a better match for your question. I've been working hard to find a new professional to assist you with your question, but sometimes finding the right professional can take a little longer than expected.

I wonder whether you're OK with continuing to wait for an answer. If you are, please let me know and I will continue my search. If not, feel free to let me know and I will cancel this question for you.

Thank you!
Nicola
Customer: replied 3 years ago.

Sure, I am ok waiting, thank you.

Expert:  Nicola-mod replied 3 years ago.
Hello,

We will continue to look for a Professional to assist you.

Thank you for your patience,
Nicola
Customer: replied 3 years ago.

Hi, I see you changed the status to Finished? Meaning there will not be a follow-up answer? Thank you

Expert:  Nicola-mod replied 3 years ago.
Hello,

Questions time out automatically. I will re-open this for you.

Thank you,
Nicola
Customer: replied 3 years ago.

Seeing no one has picked it up, should I just close this question?

Expert:  Nicola-mod replied 3 years ago.
Hello,

It is up to you. We are happy to keep looking for someone to assist.

Thank you,
Nicola
Customer: replied 3 years ago.

Let's close it at this point as unanswered please, and let me know how I can claim the refund. Thanks.

Expert:  Nicola-mod replied 3 years ago.
Hello,

I will process the refund for you now and you should receive email confirmation that this has been done.

Thank you,
Nicola

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