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Non Domicile Tax Q&A
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Non Domicile Tax Consultancy Questions
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UK CGT on unremitted currency gain
Question: Thanks for your answer to my question below. If the non-dom/UK resident just withdrew the funds from his EURO deposit account in Germany to either invest the EURO cash in a EURO denominated investment or just spend it in the EURO zone(without remitting any of those funds) would this also be a disposal for UK CGT purposes? Any exempt amount available? Tax rate the normal 18%? Original Question: A non-dom/UK resident received a gift (EURO in bank deposit account) 1.5 years ago from his mother (Swiss national/Germany resident). This gift was made and retained in Germany in a bank deposit account. In the current low interest environment it has produced only little interest (credited to the same account). The client now wishes to remit this "cash" onshore UK to fund a property purchase. Although the amount in EURO terms is still roughly the same as when the gift was received, in £ Sterling terms this EURO deposit is now worth more than £100k compared to when the gift was made. Upon remittance of this "EURO cash" onshore UK would the "currency gain" be taxable? Kind regards . . .
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Remittance of foreign currency gift
Question: A non-dom/UK resident received a gift (EURO in bank deposit account) 1.5 years ago from his mother (Swiss national/Germany resident). This gift was made and retained in Germany in a bank deposit account. In the current low interest environment it has produced only little interest (credited to the same account). The client now wishes to remit this "cash" onshore UK to fund a property purchase. Although the amount in EURO terms is still roughly the same as when the gift was received, in £ Sterling terms this EURO deposit is now worth more than £100k compared to when the gift was made. Upon remittance of this "EURO cash" onshore UK would the "currency gain" be taxable? Kind regards . . .
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Holding securities - using a nominee account or not?
Question: I am considering opening a new offshore securities account. If I ask for paper certification instead of a nominee account (ie I actually physically hold the securities myself in the UK ) does that risk that investment being deemed remitted? . . .
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Non-dom overseas business income
Question: A UK resident/Non-dom (Australian) is a Director of a property development Co expecting first profits over next 3yrs. Shareholder is a discretionary Trust, of which the Non-dom and his parents are trustees and potential (primary) beneficiaries. The Co, Trust and family members are all Australian tax resident. Trust net income expected to be about £60k worth per year and would all be distributed to Non-dom's parents. Trust also has £50k worth of sharemarket trading losses. Non-dom been in UK for 3yrs, higher rate taxpayer. Does Non-dom have any tax UK tax issues to consider in this case (even though Trust income goes to parents)? If so, does income get taxed 3 times; by Co, then parents, and also Non-dom? What could you suggest to avoid or minimise UK tax issues, if relevant? Could a Company be set up to receive and accumulate the Trust distributions, without any UK impact, and would Non-dom have to ensure not a Director or shareholder of that Co? For next few years, does arising or remittance basis seem best? Thanks. . . .
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Use of offshore company
Question: I am an Dutch national, currently domiciled in the UK but am planning to leave the UK for good in about 5 years time. I will soon be starting a consulting contract with an EU company (outside the UK) for whom I will be working in the EU (not UK) for 3 days a week and the other 2 days either in the UK or visiting group companies around the world. I intend to invoice this company for my services from an off-shore company based in a zero-rate corporation tax location, but NOT transfer any of that money to the UK in the 5 years that I will still be domiciled in the UK (or use it in any other way). If I leave 100% of the funds in the off-shore company for 5 years (and can prove that in case of an audit), will any of that be liable for tax in the UK? I will be able to use non-UK directors for my company if required. Are there any problems you can think of? Any advise you can give me in this respect? Thank you. . . .
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Remitting funds to UK
Hi, If a UK resident/Non UK Dom individual borrows the equity built up in an overseas investment property, and remits those funds to the UK to use as a deposit on a property which will become their primary residence, are there any UK tax consequences on the capital remitted? How are the repayments on the overseas loan treated by the UK? Alternatively, if an overseas immediate family member provided the funds, what is the impact? Thanks. . . .
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Old Mixed Funds
Question: I have been in the UK for about four years and have not segregated any of my offshore funds I have between original pre entry capital, or income and gains since I arrived in the UK. On this basis I understand that any remittances will be first treated as income and then gains and then only after this non taxable capital. Is there anything I can do to correct the past position, for example I am happy to work out the pre entry capital and post entry income and transfer it to a new account if that helps? Also what should I do going forward, I guess I need to open up new accounts and transfer my future interest and offshore income into this? If I have any offshore capital (for example gifts) I should keep these in a seperate account. . . .
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08/09 Return -Foreign Income / Loss on ETFs
Question: I have both gains and losses on investments in an offshore ETF without UK distribution status. These gains and losses were through onshore brokers and the settlements were to onshore accounts. Where precisely on the tax return should these be disclosed ? Does the answer change depending on whether I am filing on remittance or worldwide arising basis ? . . .
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Family Holding Structure
Question: Family Holding Structure My wife and I are British Citizens, born in the UK, and currently non UK resident and possibly non UK domiciled. We wish to arrive at a holding structure for our assets which will also be capable of trading and investing in several countries including the UK. It should also offer protection against IHT in the event of it being determined that we were UK domiciled on our demise. We have three adult children who would be our beneficiaries, two of whom are currently non UK resident. What we would like is a corporate structure rather than a trust or foundation. e.g.. OFFSHORE ----> OWNS 100% OF----->OFFSHORE COMPANY A <---- OWNS 100% OF<------ COMPANY B and these companies hold the share capital of underlying trading/investment companies. Would this work? If so, where would be the best jurisdictions? Thanks, D. . . .
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UK tax and offshore discretionary trust
Question: Dear Sirs, what are the tax implication of foreign domiciled individuals of an offshore discretionary Trust if they choose the remittance basis or the arising basis in case a distribution (of income or gains) is made or not? Kind regards . . .
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Offshore income gain of non dom
Question: Assuming a foreign domiciled person has an investment in a non qualifing fund abroad. The interest of this fund will roll up and the person will realise them (together with the capital gain)when he disposes of them. Until then if the person does not disposes of this investment the capital gain has not been realised. If i have well understood the rules basically this person, once realises the gain, has to declare it as an income instead of a capital gain making it taxable at 40% instead of 18%. He has to declare the income when the disposal of the investment takes place if he is an accrual basis payer and when he remits the amount to the UK if he is a remittance basis user. Is this view correct? . . .
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Non-resident trust
Question: Hi. My wife and myself are non-domiciled residents. We came from New Zealand in November 2000 and have lived in UK since. We have offshore investments. I would like settle a NZ trust to hold these assets. We plan to leave the UK shortly to live elsewhere. We have two daughters, both NZ born who came out here with us. The older one is now 23 and lives in Cairo. The younger one is 20 and leaves on March 1st to return to NZ to live and work. What are our UK obligations if we settle a NZ non-resident discretionary trust with all four family members as beneficiaries? I believe we must have offshore trustees only. Is this correct? Also I believe to be non-resident in UK the trust cannot have any UK resident beneficiaries. Is this correct? If we were to settle a trust with our aughters only as beneficiaries, but with the option to add ourselves as beneficiaries at a later date, would this cause problems. In short, what would be a suitable structure for as trust to avoid any UK obligations. Thanks, . . .
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Minor child's inheritance of Australian estate
Question: I am trying to come to grips with sorting out my late husband's estate. He died in August 2009, he was Australian. Our two properties, one in UK and one in Australia were owned jointly and the titles are such that they will directly pass to me. I will also inherit a percentage of his Australian estate consisting partially of Australian shares. The children 18 and 12 will inherit from their father's Australian estate also. I have been told that my son is legally too young to inherit and a trust will have to be set up for him according to Australian inheritence laws and that as he is a minor the trust is liable to be taxed at a high rate (this will be compounded by him being a UK resident I imagine). I don't suppose that there is any way to avoid him losing so much of his inheritence to the Australian Tax Office is there? . . .
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Follow up on offsetting foreign losses for non dom
Question: I apologise for not being clear earlier.I am non dom but uk resident .Say i have 100K in my offshore account and am choosing the remittance basis .Although this account has no income I have started with 100k made capital gains on my US investments and lost 100k also. As i am not allowed to deduct offshore losses. My question is: 1)if i were to remit these funds would I pay 18% on 100K 2)IF i had 10k UK losses would my tax liability be 18k-10k or would it be 100-10=90 x 18% I know it sounds a basic question but i am confused and need your help Many thanks . . .
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Various non dom questions
Questions: Tax on foreign income in the year in which you are non resident 1. As a UK non domicile resident would I need to pay tax on my foreign income if I left UK for the tax year in which that income arose (i.e. income paid in 2012/2013 and I spend less than 90 days in the UK during that period)? Can i bring that income to the UK the following tax year or would I need to be a non-resident for 5 yrs before I do so? Exchange rate when claiming arising basis: 2. Foreign icome received in EUR during various points in a tax year. EUR/ GBP exchage rate at a time was say 1EUR = 0.85GBP, 1EUR = 0.90GBP, etc. Tax return is being submitted by 31 Oct, when 1EUR say = 0.80GBP. Do i declare income using October rate of 0.80 GBP or the rate when the income was received? In the above case the EUR income will be remitted to the UK at 0.80GBP to pay my UK tax liability. Remittance on account payment: 3. If in one year I nominate £1 for £30k RBC, what would be my on-account charge for the next year? What is the best nominated amount to minimise on-account payment given that no remittance is anticipated? What if I opt for arising basis next year? Remittance for the benefit of grandchildren 4. If I transfer an asset abroad to my non-resident parent and pay RBC in that year, can my parent then use income from that foreign asset to pay for his granchildren education in the UK (i.e transfer now his foreign income into UK school's account) for the benefit of his grandchild? . . .
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Offset of UK losses for non dom remittance basis user
Question: I am a non dom UK resident and may choose the remittance basis. In 2006 I had a loss 0f 30 k on my UK investments (shares of public companies) I also have a offshore account which contains capital and capital gains from foreign shares but no income.IF i were to remit from my offshore account how much could i remit before i would incur a tax liability given the 30k loss (no election made). Also as the gains were made in 2006 and 2007 would i be able to take the capital gains allowance given that i am remitting in 2010 where if i chose the remittance basis that would not be allowed many thanks for your great site . . .
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Offshore Tax Book
Non Dom Tax Book
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Capital Gains Tax
