Non-Domicile Individal Arriving in the UK
The Background
We were approached by an overseas individual, whose business was expanding to the UK. As part of the expansion, he needed to be present in the UK for what he expected to be the next 2-3 years.
The individual had numerous businesses, including both UK and overseas companies.
The majority of his income and associated wealth was from overseas sources.
Whilst in the UK working on his new UK company, he was not anticipating having any UK sourced income.
Problem
UK tax residents are taxed on their worldwide income, unless certain elections are made.
As our client had substantial worldwide income and gains, he was keen to not be taxed on the UK on this income and gains.
Suffering tax in the UK would not only be disadvantageous from a tax perspective, it would create a substantial administration burden in the UK.
Our client also wanted to bring funds to the UK to support himself whilst here on business and was keen to not be taxed on this income, as it had been taxed in other countries previously.
Solution
We worked with our client on his UK tax planning well before he actually came to the UK.
The key in international tax planning is ensuring you have sufficient time to design a suitable plan and then execute it.
By fully understanding our clients overseas income sources, along with his UK tax position and motivations for being in the UK, we were able to work with him to ensure he had a tax efficient plan for his time in the UK.
In this instance, our client claimed the remittance basis of tax, only being taxed on his UK sourced income, along with any money remitted to the UK.
As our client had no UK sourced income, he had no taxable income in the UK and therefore no tax liability.
He was able to make this election without incurring any remittance basis charges as he only planned on being in the UK for 3 years.
Although he lost his UK personal allowance for making such an election, as he had no UK income, this didn’t impact his UK tax position.
Our client was therefore able to achieve his main goal of not having his overseas income subject to UK tax, which provided him with a significant tax benefit.
Additional Benefit
As we dealt with the planning prior to him assuming UK residency, our client was able to move funds to the UK, before becoming a UK tax payer.
This meant he was able to pre-empt his UK residency and transfer enough capital to not require any further remittances to the UK for his duration here.
As this remittance to the UK took place prior to him being a remittance basis tax payer, this was free from any UK tax charge.
As our client was an EU national, we worked with him and our partners to assist with his settlement status in the UK, in case he wished to settle here for any longer periods.
This gave him the peace of mind that he could have the option to be here longer if his UK business needed him to me.
Our client gave us a very specific set of objectives and we were pleased to be able to say they were all met.
