Tax for Norwegian living in the UK

Tax Question:

I am a European citizen who have been living in the UK for 20 years for work reasons. I still have strong ties to my home country where I spend my holidays, have family, own a property and eventually will retire.

I have no income from my home country at present. If I did gain income from my home country either in the form of employment, sale of property or inheritance, what would the tax position be? Does a double tax agreement apply w/ Norway and do I have to pay the £30.000 for non-dom's?

What would the position be for the family in my home country if I died? I have no family in the UK but I own property here.

Thank you for your help.

Answer:

I have no income from my home country at present. If I did gain income from my home country either in the form of employment, sale of property or inheritance, what would the tax position be? Does a double tax agreement apply w/ Norway and do I have to pay the £30.000 for non-dom's?

Based on the information above you would be UK resident but should have a good argument for non UK domicile status. This is on the basis that you have a foreign domicile of origin and have not made the UK your domicile of choice due to having strong overseas ties and a desire to return there to retire.

In terms of foreign income and capital gains this would be subject to UK tax (income tax or capital gains tax) unless you claimed the remittance basis. If you did claim the remittance basis you could avoid UK tax on the foreign income or gains by retaining it abroad. However as you've been UK resident for more than 7 tax years you would be subject to the £30K remittance tax charge if you claimed the remittance basis.It would therefore only be worthwhile claiming it if there was substantial unremitted income or capital gains.

An overseas inheritance would not be subject to UK tax if the deceased was non UK domiciled.

The UK-Norway double tax treaty could certainly apply depending on the type of income or gains to restrict the tax to just one country/or provide for a specific tax credit. It would depend on the income or gain in question. A capital gain on the sale of a Norwegian property for instance would remain taxable in both the UK and Norway and there would be a UK tax credit for any Norwegian tax suffered.

In terms of inheritance tax you would be deemed UK domiciled (as you have been here for more than 17 years) and would be subject to UK IHT on your worldwide estate. If you leave the UK you would cease to be a deemed domicile after 3 years and would then just be taxed on your UK estate (ie UK property) but would be able to offset the UK nil rate band (currently £325K).

About the Author

He worked in Ernst & Youngs Entrepreneurial Services department for a number of years before setting up his own tax planning practice. He is now a full time tax author.

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