Tax breaks for ex-pats working in the UK

TAP INTO TAX Iss. 2

The purpose of this series of blogs is to highlight innovative tax planning ideas, which you can ‘TAP’ into; we hope you find them useful.

If you are resident and domiciled in the UK for tax purposes you are subject to tax on your worldwide earnings as they arise.

If however, you are a ‘non-dom’, you are entitled to claim the ‘remittance basis’ of taxation (click here for more details). The ‘remittance basis’ can be very beneficial, in particular if you are a ‘non-dom’ who is resident but not-ordinarily resident (R, NOR) in the UK.

Whether or not an individual is ordinarily resident in the UK will depend on the facts of the particular case. Generally speaking you will be treated as ordinarily resident once your presence in the UK has a settled purpose or you intend to be here for a period of three years or more from the date you came to the UK.

Non-ordinary residence allows a certain level of flexibility for individuals who perform employment duties outside of the UK. Providing the earnings in respect of the duties performed overseas are not remitted or enjoyed in the UK, it is possible to keep them out of the UK tax charge.

In order to achieve this it is important you have the right offshore bank account structure in place and that you correctly report the basis of taxation you have applied within your UK Tax Return. We can assist you with implementing a suitable structure and ensuring your compliance obligations are met.

For those working in the UK on a temporary basis (less than 24 months), it may also be possible to benefit from “detached duty relief” which allows certain expenses to be claimed against UK taxable earnings.

If you would like an opinion on your residence, ordinary residence or domicile status tax and associated planning opportunities please contact us.