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TonyTax
TonyTax, Tax Consultant
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Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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Dear ***** I would like some help please in respect of our

Resolved Question:

Dear *****
I would like some help please in respect of our Greek client who wants to come to the UK.
What are the tax rules if he is considered resident but not domiciled or if he is considered resident and domiciled in the UK. Would he also be considered to be 'ordinary resident'? What would make him fall into one of these categories and what would be the tax effect?
Thanks very much.
Kind regards
Paul
Submitted: 1 year ago.
Category: Tax
Expert:  TonyTax replied 1 year ago.

Hi.

First off, the concept of ordinary residence no longer exists and hasn't since 6 April 2013.

The Statutory Residence Test was introduced with effect from 6 April 2013 and each tax year is dealt with in isolation as opposed to the old system of an average of days spent in the UK over a rolling period of four years which some people still think exists. The detail of the SRT can be found here. A summary of the rules is here.

A resident but non-domiciled individual has several choices as to how they are taxed:

1 They can choose to be taxed on their worldwide income as a UK resident and domiciled individual would be. This is how most non-UK domiciled people will be taxed as they won't have significant non-UK income and/or gains.

2 They can choose to be taxed on their UK income and on non-UK income they remit to the UK with credit being given for foreign tax paid on the same income against the UK tax liability on that income. This is how non-UK domiciled people might choose to be taxed if they have significant non-UK income and/gains.

Look here and at section 9 of RDR1 here for information on the remittance basis of assessment. Note the remittance basis charge levied on long term UK resident but non-UK domiciled individuals if they choose to pay tax on the remittance basis.

Domicile can be a difficult concept top understand and it is difficult to lose your domicile of birth. Take a look at section 5 of RDR1 here for information on domicile.

If you are resident in the UK for 17 out of the previous 20 tax years you will be treated as UK domiciled for Inheritance Tax purposes which means that your worldwide estate will be liable to UK IHT as opposed to just your UK estate if you are UK resident for a shorter period.

From 6 April 2017, the UK government proposes to introduce changes detailed in 3 here such that most long term UK resident non-UK domiciled individuals will pay UK taxes on their worldwide incomes as a UK domiciled individual does.

I hope this helps but let me know if you have any further questions.

TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15841
Experience: Inc Tax, CGT, Corp Tax, IHT, VAT.
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