Reasons Why Non-Domiciled (Remittance Basis) Taxation Remains Attractive In the UK

Many individuals and families continue to find the UK an ideal place to study, work, and live in. According to a report released by Office for National Statistics in late 2017, 244,000 more people are coming to Britain than those leaving. Among the possible pull factors is the attractive remittance basis of taxation for non-domiciles.

If you are considering qualifying for non-dom tax, you will typically remain a foreign national in the UK. Your domicile will continue to be your country of birth even though HMRC will treat you as a tax resident. You should also be reminded that your UK residency cannot be indefinite once you are considered a non-dom.

Tax residence status for a UK non-dom may change every year based on personal circumstances. As a result, it is always advisable to contact a cheap chartered accountant in London and Birmingham to remain aware of the possible tax consequences.

While a UK resident non-domiciled individual has to choose between arising basis and remittance basis of taxation, many prefer the later. However, it is important to note that not all UK non-domiciles have similar tax requirements. Here are some of the reasons why many people opt for remittance basis:

The remittance basis applies when an individual chooses to be taxed only on foreign income and gains brought to the UK as well as UK income and gains. This enables applicants to protect their foreign wealth not carried into the UK from taxation. Since the majority of temporary residents have accumulated a significant amount of wealth in the countries of birth, remittance basis provides an ideal alternative.

The option allows non-domiciles to choose the preferred tax duration based on individual circumstances, such as every year. In addition, it is absolutely free of charge to claim remittance basis within the first six years of your residency in the UK. Those filing for a claim after this period are subjected to annual remittance basis charge.

Remittance charge varies with duration of stay. Those who have been residents for 12 out of the last 14 years pay £60,000.

Unlike arising basis of taxation, you will not be required to declare your worldwide income if you choose to be taxed on the remittance basis. Other aspects that make remittance basis attractive include:

Zero tax on overseas income/assets that you are not bringing into the UK for 15 years. Even after the period, the assets/income is not subject to taxation if they are under an overseas trust. You only pay tax on benefits that come from the trust. In addition, an individual’s income is not taxed for the first 3 years for any work done outside the United Kingdom. Furthermore, you have the privilege to enjoy the benefits whether or not you are working in the UK.

If you are a non-dom in the UK and you find it complicated to understand either of the taxation options, feel free to consult WeAccountax accounting experts. Our tax experts will help you establish ways of cutting-down your tax burden, keep you updated on the forthcoming non-dom tax rules, and present you with opportunities on how to minimize tax exposure. Contact us now for free non-dom tax consultation services. 

In order to qualify for remittance tax, you must file your self assessment tax return with HMRC. You should note that UK residents who claim for remittance basis of taxation in a fiscal year lose tax-free personal allowances.