22 Aug 2005 - News concerning Non Doms in the United Kingdom
| RESIDENCY &
NON-DOMICILED - how do you classify? The Taxes Acts Revenue guidlines does not define residence and ordinary residence persea, and the guidelines are based on rulings from the courts. Varying factors may come into play, for example, how many days are spent in the U.K. If you are in the U.K. for 183 days or more in the tax year, then you will be considered resident in the U.K. Having said this, you may be considered as resident even if you spend less than 183 days in a tax year in the U.K. - depending on other factors. After several years of residency in the U.K., you will be considered as what is termed as an ordinary resident. This may change in circumstances, where you usually are there most of the year, and say, spend a year or most of the year travelling elsewhere. Domicile is based on general law and one could say, put simply, that it is where one has a permanent residence. For instance one can only have one permanent home at any one time. Domicile is different from both nationality and residence and the domicile concept is currently under government review. To change domicile (or become a non-domiciled of the U.K.) broadly speaking one needs to leave the country of domicile. Varying other factors may come into play to be considered non-domicile and it is generally understood that simply living in another country (although par for the course) for a period of time is sufficient. It is recommended that a strong case to prove that one is non-domiciled (or domiciled elsewhere) be built up factoring in even subtler points, for instance, to include where does one wish to be buried (assuming one does wish to be buried). So WHAT ARE THE OPPORTUNITIES for non-domiciled persons with United Kingdom assets? United Kingdom assets to include property in the U.K., shares in a U.K. company, or other assets can be bought, gifted or transferred to a low tax jurisdiction company. The offshore company could be structured to give your assets maximum protection to be held as an asset of a discretionary trust. Provided both the company and trust owning the assets were managed in a low or nil tax jurisdiction like Monaco, there would be no taxation in this jurisdiction. This would also give the added argument that the individual personally does not have a large presence in the U.K. While trusts are taxed when holding property directly in the U.K. directly based on the rental value and / or a straight percentage, there is concern that ownership of UK property by offshore vehicles may subject UK residents who control companies which own overseas properties to income tax on the presumed benefit they gain from occupation of the properties. Other benefits - SALARIES can be exempt from taxation in the U.K. Offshore companies can pay over a salary to a non-domiciled person under employment contract exempt from income tax. The provisio is that the nature of the employment is not carried out in the U.K., nor is the salary paid to the person in the U.K. Other benefits - INHERITANCE taxation issues If you are non-domiciled inheritance tax will only apply to assets in the U.K. Some of the U.K. assets are exempt for the tax charge. |
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