Will I be subject to tax on my worldwide income and gains if I become tax resident in the UK?
It depends. The default position is that an individual who is tax resident in the UK in any given tax year (which runs from 6 April to 5 April each year) will be subject to UK income tax and capital gains tax (“CGT”) on their worldwide income and gains as they are generated (known as “the arising basis”).
However, if your circumstances allow, it may be possible to elect for “the remittance basis” to apply instead. Individuals taxed on the remittance basis are:
- still liable to UK income tax and CGT on their UK source income and gains realised on UK assets; but
- only taxed on non-UK source income and gains realised on non-UK assets if these funds (or property deriving from them) are “remitted” to the UK.
The remittance basis is available (under the right circumstances) to individuals who are UK tax resident but not UK domiciled (often referred to as “non-doms”). In the UK, the concept of “domicile” (broadly speaking) denotes the jurisdiction with which an individual is most closely connected and is often said to be the country which they consider to be their permanent home, or where they intend to end their days. Whereas an individual may be tax resident in more than one jurisdiction at any given time, an individual is only capable of having one domicile.
Assuming you are not currently domiciled in the UK, you will only acquire a UK domicile under the common law if you reside in the UK and you do so with the intention to reside here “permanently and indefinitely”.
The remittance rules are complex, and the definition of what constitutes a remittance is extremely wide. It is also important to note that, under certain circumstances (relating largely to a lengthier or more permanent stay in the UK), there may be an annual charge for claiming the remittance basis or you may lose the ability to be taxed on the remittance basis completely.
There are also special rules for employment income, (covered in the answer to question 4). Further, if you remain tax resident in another country, the UK may have a double tax treaty with that country, which may mitigate any potential double taxation.
Senior Executives: thinking of relocating to the UK?
Considering the employment offer, negotiating the contract and package
- I’ve been offered a new role in the UK: what are the key terms that I should expect to see and which should I try to negotiate?
- By accepting a new role in the UK, I shall be treated as a “bad leaver” by my current employer and forfeit significant equity and deferred payments: is there anything that I can do?
- I hear that it can be a common practice to have dual employment contracts: one in the UK, and the other abroad. What's this all about?
- I have some existing share options which have vested but I have not yet exercised them? What should I do about them?
- I am a private equity executive with carried interest in a fund I manage. Is there a way to improve my tax position in respect of this carry, or is this prevented by the UK’s new tax rules aimed at private equity?
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.
We answer common questions raised at key stages of the relocation process.