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TonyTax
TonyTax, Tax Consultant
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I am a UK resident. My wife joined me in the UK 3 years ago

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I am a UK resident. My wife joined me in the UK 3 years ago in 2013. She was domiciled outside EU. We married outside EU. Before she arrived to the UK her late father left her equity and investments in Lichtenstein. What tax does he have to pay? Does she only have to pay tax on profits of investment?
Submitted: 11 months ago.
Category: Tax
Expert:  TonyTax replied 11 months ago.
Hi. Let me take a look at this and I'll get back to you with an answer. It will take a while so please bear with me.
Expert:  TonyTax replied 11 months ago.
Your wife does not have to pay UK tax on capital she held immediately before she came to live in the UK. As she is non-UK domiciled she has the choice as to whether she pays UK tax on her non-UK source income and gains or not. The choices are: 1 She can choose to pay UK tax on her worldwide income and gains as a UK domiciled individual does or 2 if she elects for the remittance basis of assessment, she will pay tax on UK source income and on non-UK source income that she brings into the UK. See section 9 of RDR1 here. If your wife chooses to use the remittance basis of assessment, after having been in the UK for seven of the previous tax years, she will have to pay the remittance basis charge. See paragraph 9.29 to 9.32 of RDR1 here. Whichever way your wife chooses to be taxed, she will get credit against her UK tax liability on non-UK source income and gains for any foreign tax paid on the same income. There are some notes on changes to the taxation of non-UK domiciled individuals which are due to come into effect on 6 April 2017 for long term residents who are non-UK domiciled here. I hope this helps but let me know if you have any further questions.
Customer: replied 11 months ago.
Thank you for the quick reply.There is just one thing that I am not understanding. You mentioned she is non-UK domiciled, not sure what that means. We have been living together since 2013 in the UK. Does that make her UK domiciled?When does her status change from non-UK domiciled to UK-domiciled?Many thanks for your help
Expert:  TonyTax replied 11 months ago.
No, it makes her UK resident. Take a look at section 5 of RDR1 here for information on what domicile is. It's a difficult concept and has been the subject of many tax cases. You cannot just change your domicile but if your wife simply disclosed her non-UK income to HMRC and paid tax on it, she would effectively be treated as is she was UK domiciled. After 15 tax years in the UK out of the previous 20, an individual will no longer be able to use the remittance basis of assessment and will be deemed as UK domiciled.
Customer: replied 11 months ago.
Thank you for the quick reply.What are the tax implications, if any, if she wants to use part of the capital to purchase a property in the UK?At what point will she need to submit HMRC self assessment? At the moment, since the 3 years she has been here, she has made a loss on her investments/capital, but at what point in the future does she need to submit? or does she need to submit even if she made a loss?Many thanks for your help
Expert:  TonyTax replied 11 months ago.
If your wife has unremitted non-UK income or gains in any one tax year of £2,000 or more, then she needs to tell HMRC if she wishes to use the remittance basis of assessment for that tax year. If the money she brought into the UK could be identified as capital which had been held before she came to the UK, then it would not constitute income or gains. A record needs to be kept of income and gains arising in each tax year.
TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15838
Experience: Inc Tax, CGT, Corp Tax, IHT, VAT.
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