'GOING
ABROAD TO AVOID UK TAX?'
The
increasing number of UK citizens retiring
or working abroad raises questions of
liability to UK tax. The concepts which
determine liability are residence and
domicile, and the main principles are
as follows:
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Income
arising in the UK is subject to UK tax whether
or not the recipient is resident in the
UK.
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Income arising outside the UK is subject
to UK tax if the recipient is resident in
the UK.
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Gains
on the disposal of assets anywhere in the
world are subject to UK tax if the recipient
is resident or ordinarily resident in the
UK.
An
individual will be classified as UK resident
if he or she spends 183 or more days in the
UK during a tax year or fewer than 183 days
but more than 90 days a year on average over
a four-year period.
Individuals who are domiciled in the UK are
subject to inheritance tax on their worldwide
assets, and it is much more difficult to change
domicile than it is to become non-resident.
Account will be taken of the individual’s
actions and intentions, including social and
business arrangements. The retention of a UK
home could well suggest that there is no intention
to relinquish the ties that bind.
Graham Thomas |
