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Daughter, 30, Doctorate + Post-doctorlal experience 1.5 y

Customer Question

Daughter, 30, Doctorate + Post-doctorlal experience 1.5 y USA, on grant support in UK since autumn 2013, taking up job in Switzerland July 1 2014. Need help and advice on residency status and tax liabilities.
Submitted: 3 years ago.
Category: Tax
Expert:  bigduckontax replied 3 years ago.
Hello, I'm Keith and happy to help you with your question.

What is your daughter's nationality and normal location of residence, please.
Customer: replied 3 years ago.

HI Keith,


 


British by birth and residence. Attended Cambridge University. 'NOrmally' resident in UK before going to USA on a scholarship for limited tme.


 


Mike

Expert:  bigduckontax replied 3 years ago.
As a general rule your daughter is liable for UK Income Tax on her income world wide. However, under the Double Taxation Treaty between the UK and Switzerland any tax deducted by Switzerland is allowable as a tax credit against any UK tax liability.On leaving the UK she should:

Complete a form P85 and send it to her tax office. This tells HMRC that she has left the UK permanently and they will mark her as non-resident from the next tax year. The tax year in which she leaves will be, under an extra statutory concession, be split into 2 parts, one resident and one non resident.

Once she is non-resident she may spend only 90 days in the UK in each tax year to retain non-resident status.
Customer: replied 3 years ago.

Keith


 


What I most need to knowb is her tax position in 2013-2015. The split details defeat me.


 


Mike

Expert:  bigduckontax replied 3 years ago.
Right Mike, that is two tax years, 13/14 and the current year 14/15. She will be liable to UK taxation on the whole of her world wide earned income. Again there is a Double Taxation Treaty between the UK and the US and, in addition, for many individual states within the Union also, so similar tax credit rules apply.

Of course she retains, as a British Citizen,, her entitlement to a Personal Allowance. For 14/15 it as, as you are probably aware, GBP 10K.

The split residency creates 2 sections for Income Tax purposes, the period before departure and that after. In the tax year following the year of departure the P85 process will treat her as non-resident.

Without quantitative figures, of course, I cannot give other than general comment and advice.
bigduckontax, Accountant
Category: Tax
Satisfied Customers: 3612
Experience: FCCA FCMA CGMA ACIS
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Expert:  bigduckontax replied 3 years ago.
Thank you for your support.

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