Do I escape the tax net?

Leaving the UK for tax purposes is a complicated matter. Becoming non-resident is not in itself enough to escape the UK tax net.

Let’s assume that the individual (a) is a relatively short-term visitor (so has spent fewer than 15 years in the UK), (b) has maintained his or her non-UK domiciled status (so has not formed the intention to remain in the UK) and (c) does not have a domicile of origin here. This person should note that:

1. Non-residents only pay UK income tax on UK source income and UK capital gains tax (CGT) on UK residential property gains;
2. Leaving part way through a tax year of residence technically makes one resident here for all of that year, but ‘split year’ treatment is available in certain limited circumstances, so that the individual is treated as non-resident from the day after departure;
3. The individual will remain liable to inheritance tax (IHT) on UK situs assets;
4. A return to the UK within 6 complete tax years will bring income and gains realised during the period of non-UK residence into charge to UK tax: those income and gains are treated as arising in the tax year of return.

What if the non-domiciled individual was a long-term resident, and had spent more than 15 years out of the last twenty in the UK? Things then get a little more complicated:

1. Even if someone is not domiciled in the UK for common law purposes, they become statutorily deemed to be domiciled here for tax purposes if they have been resident in the UK for 15 out of the last 20 UK tax years. This deeming puts them onto global taxation: UK income tax on global income; CGT on global gains; and IHT on the global estate.
2. If the person leaves and does not return, they need at least 3 full tax years out of the UK to move from global IHT to IHT solely on UK situs assets.
3. If the person does return to the UK in the future, they should note that then need at least 6 full tax years out of the UK (a) to break the deeming provisions for income tax, CGT and IHT and (b) to avoid the temporary non residence provisions applying, as indicated in point 4 above.

Senior Executives: thinking of relocating to the UK?

Moving on from the UK

• I have Indefinite Leave to Remain (ILR) in the UK having permanently resided here to work as a C-suite executive for a number of years. I’m considering a new employment opportunity abroad. What’s the impact on my ILR if I leave the UK for this new role?
• Your employer has indicated that they no longer require you to work in the UK – what should you think about?
• I bought a property in the UK in my name while I was here. I am undecided whether to sell it or keep it – what UK tax considerations should I bear in mind?
• How will my cryptoassets be affected if I were to move country?

Please do contact any member of our Sen Ex Advisory Group to suggest a question or to find out more about how we can help.

Non-dom rules to be replaced with four-year temporary residence regime

The Chancellor of the Exchequer, Jeremy Hunt, has announced that the government will abolish the current tax regime for individuals who are UK resident but not UK domiciled in favour of a residency-based system, which will apply from 6 April 2025.

Senior Executives: thinking of relocating to the UK?

We answer common questions raised at key stages of the relocation process.