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TonyTax
TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 16665
Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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If I don't earn any money in the UK, and only live on what I

Customer Question

Hello, if I don't earn any money in the UK, and only live on what I bring in from another country, do I have to pay tax here in the UK? If so, how long can I be in the UK before I am liable to have to pay it?
JA: Have you talked to a tax professional about this?
Customer: No.
JA: Anything else you want the Accountant to know before I connect you?
Customer: Yes, if I live in the UK, but pay taxes in another country and have found that my income was too low to incur taxes, would it be the same here in the UK or would I be asked to pay tax on the money I brought across from the other country?
JA: Which tax year is this for?
Customer: All years since 2015
Submitted: 2 months ago.
Category: Tax
Expert:  TonyTax replied 2 months ago.

Hi. My name is*****'m looking at your question now and will post my answer or ask for more information here in a short while.

Expert:  TonyTax replied 2 months ago.

Are you bringing money you made before you came to the UK into the UK or money you are making now or both into the UK?

Customer: replied 2 months ago.
I have been bringing money across from Australia to the UK over the last few years that I am making from properties I own in Australia, however I've been living on available credit in Australia and owe money to the banks there and it was found that I didn't owe money to the Tax Office because of losses made over this period of time.
Expert:  TonyTax replied 2 months ago.

Thanks.

Leave this with me while I draft my answer.

Expert:  TonyTax replied 2 months ago.

I know that rental profits are computed using an element of depreciation in Australia but that doesn't apply in the UK. Take a look here for information on computing rental profits for UK tax purposes.

As you are resident in the UK, you have the following options:

Take a look at RDR1 here, in particular section 9.

As a non-UK national, ie non-UK domiciled, you have two basic choices:

1 You can be taxed as any UK national resident in the UK is, ie on their worldwide income with credit being given for foreign tax paid.

2 You can choose to be taxed on your UK income and on non-UK income that you remit to the UK with credit being given for Australian tax paid on Australian rental income against any UK tax liability on the same income.

After you have been resident in the UK for 7 of the previous 9 tax years, you will have to pay the remittance basis charge if you wish to continue to use the remittance basis of assessment. See paragraphs 9.29 to 9.43 of RDR1. The charge increases after you have been resident in the UK for 12 of the previous 14 tax years. After you have been resident in the UK for 15 of the previous 20 tax years, you are for all intents and purposes taxed in the same was as a UK national, ie on worldwide income. See here.

I suggest you appoint an accountant or tax adviser to look at your situation in more depth. It may be that you don't have a UK tax liability.

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

Customer: replied 2 months ago.
Thank you. I will read this, but I do have one final question to ask about this and that is if I sold a house there last year which did not incur CGT as it had been my home for most of the time, would I be exempt from paying CGT for that house here too if I am classified as a resident?
Customer: replied 2 months ago.
I should also add that I have a British Passport ... I'm not sure if this makes a difference.
Expert:  TonyTax replied 2 months ago.

It depends whether you consider that you are UK or Australian domiciled. If you consider that you are UK domiciled then you should be paying UK tax on your worldwide income.

Customer: replied 2 months ago.
I'd rather be considered an Australian for tax reasons because I know where I'm at with that and it's because I don't earn any income here in the UK that I'm asking this. I know that I MUST pay income tax in Australia because that's where my rental properties are. I don't want to be considered UK domiciled if I can help it. Then I wouldn't have to worry any further, but this is what I'm trying to determine and the reason for my enquiry.
Expert:  TonyTax replied 2 months ago.

If you make a profit from selling your home which has been your main home for the entire period of ownership then you will not have to pay CGT in the UK. You also get the last 18 months of ownership of a property which has been your main home as a tax free period when you have not been living in it. See HS283.

I'll deal with the rental income in my next post.

Expert:  TonyTax replied 2 months ago.

As I said at the start, rental profits are computed differently for UK tax purposes compared to how it is done in Australia so whilst you may not have a taxable profit in Australia you may have for UK tax purposes.

Any non-UK income you bring into the UK is potentially taxable in the UK subject to the personal allowance of £12,500. If you leave £2,000 or more of non-UK income abroad for any tax year, then you need to make a claim via a self-assessment tax return for the remittance basis on the basis that you consider yourself to be non-UK domiciled to apply so that you are not liable to UK tax on it but you may lose your UK personal allowance.

Customer: replied 2 months ago.
Thank you. ***** make a mistake and believe I'm not liable to have to pay tax and it is found to be incorrect, is there a large fine for this?
Expert:  TonyTax replied 2 months ago.

Domicile is a matter of opinion. If HMRC disagree with you you can appeal. Any fines would be related to tax liabilities. As you have only been here 4 years, I'd claim non-UK domicile if I were you.

Customer: replied 2 months ago.
As a British/Australian citizen, part of my issue is my inheritance. In Australia there is no inheritance tax, but since there is here, if I am seen to be a resident here when my mother passes, will HMRC tax me on this or would it only be for money brought into the country, say if I bring this inheritance here (which would amount to about £500,000)?
Expert:  TonyTax replied 2 months ago.

In the UK Inheritance Tax is paid by the deceased estate, not the recipient. If your mother is not UK domiciled then only her UK assets on death could possibly be liable to UK IHT with the first £325,000 being taxed at 0%. UK IHT has nothing to do with tax residence. It's all about domicile.