Foreign Domicile, Non-UK domiciled,
With effect 6 April 2008 domicile rules in the UK changed for foreign non-UK domicile nationals resident in the UK and foreign non-UK domicile nationals working in the UK.
What has changed for Foreign Non-UK Nationals?
Previously, for foreign non-UK domicile nationals who were resident, your were only taxable in the UK on UK income received or foreign income remitted to the UK. In short, if you had foreign income that was not brought into the UK, it was not taxed in the UK. This has changed where foreign non-UK domicile nationals will now be subject to a residency test and will pay taxes on foreign income.
7 Year Rule:
If you are a foreign non-UK domicile national and have lived in the UK for 7 of the last 9 years you are deemed fully resident in the UK for income tax and capital gains purposes and therefore subject to tax in the UK on your worldwide income.
(Note: Inheritance Tax is different: As a foreign non-UK Domicile you will not be subject to UK inheritance on Non-UK assets until you have been resident in the UK for 17 of the last 20 years and become a domicile of choice).
A foreign non-UK domicile national can either pay taxes in full in the UK or can claim the "remittance basis" of taxation.
Remittance Basis Users (RBU):
If you are a foreign non-UK domicile national resident in the UK and claim the remittance basis, you are subject to the following rules:
In summary, most Foreign Non-UK Nationals will either pay taxes in the UK on all Worldwide income or pay a tax charge of £50,000
The £50,000 Charge (increased from £30,000 in April 2012)
If a foreign non-UK domicile national elects to be a Remittance Basis User RBU for the tax year, they are a Remittance Basis User RBU for that tax whole year.
A foreign non-UK domicile national is able to make an election and state that the £50,000 tax charge is in respect of specified investments which means that if you remit ie. income is paid to you in the UK from those investments. They will not be taxed again in the UK.
If a foreign non-UK domicile national chooses not to make an election and not disclose which investments the £50,000 charge relates to, any income remitted to the UK will be taxed and they are not allowed to offset the previously paid £50,000 charge against any new tax.
What income of foreign non-UK domicile national is not taxed?
Is there anything a foreign non-UK domicile national can do?
Yes, there are ways that a foreign non-UK domicile national invest offshore and not derive income and not pay the £50,000 tax charge but you need to contact us for expert financial advice.