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Residence,domicileand theremittancebasis

Part5ofthisguidancewasupdatedinFebruary2010toreflectlegislativechanges
madetotheremittancebasisrules.
TheotherpartsofthisguidancewererevisedinDecember2010.Thisrevisedversion
willapplyfromthispublication.
HMRevenue&Customs(HMRC)doesnotconsiderthatthelatestrevisionshave
alteredthecurrentpositioninmostcases.Howeveryoucancontinuetousethe
wordinginthepreviousversionofHMRC6foranytaxliabilitythatarisesbefore
5April2011.

HMRC6

Contents

1 2 3 4 5 6 7 8 9 10 11 12 13 Introduction ResidenceintheUK OrdinaryresidenceintheUK Domicile Theremittancebasis UKpersonaltaxallowances ComingtotheUK DepartingfromtheUK DoubleTaxationRelief(DTR)and


DoubleTaxationAgreements(DTAs) Typesofincome NationalInsurancecontributions(NICs) Glossary ContactingHMRC Page3
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1Introduction

ThisguidancereplacestheIR20Residentsandnonresidents:Liabilitytotaxin theUnitedKingdom.AnypracticesassociatedwiththeIR20whetherovertly expressedornotwillnotapplyfrom6April2009,unlessprovidedfor outsidetheIR20(instatutelaw,incaselaw,inpublishedextrastatutory concession,orinaguidancenote). Thisguidanceoutlinesour(HMRevenue&Customs)applicationand interpretationoflegislationandcaselaw.Thematerialisprovidedforyour guidance.Itsetsoutthemainfactorsthataretakenintoaccountbasedonthe rulingsofthecourts.Whetheranysectionofthisgeneralguidanceisapplicable toyoudependsonyourparticularfacts,aseachsetofcircumstanceswillbe different.Italsoseekstogivepracticalexamplesofwhattherelevantlaw means;theseareonlyillustrativeexamples.
Manyofthetechnical termsusedinthis guidanceareexplained intheglossaryat part12.

Anypracticesdescribedinthisguidancearesubjecttoperiodicreviewandmay subsequentlybealteredorwithdrawn.Ifpracticesweretobechangedor revokedthiswouldnotnormallybedoneretrospectively. YoudonotneedtoreadthisguidanceifyouliveintheUKandpayUKtax onyourUKincomeandchargeablegainsandyouplantoremainintheUK andeither: haveneverreceivedforeignincomeorforeignchargeablegainsor havehadforeignincomeorchargeablegainsinthepastandyoupaidUKtax ontheforeignincomeorgainsintheyearswhenthesearose/accrued. YourresidencepositionisoneofthefactorsthatdetermineswhatUKtaxyou needtopayonwhattypesofincomeandgains.Ifyouareresidentand ordinarilyresidentintheUKyouwillbeliabletoUKtaxonallyourincome wherever it arises (unless you claim the remittancebasis because you are not UKdomiciled). This includes earned income from employment and selfemployment,as well as yourUKinvestmentincomesuchasdividendsor interestfrom a bank or building society. You will also pay Capital Gains Tax on any gains you have from the disposal of certain assets which belong to you. Even if you are resident (or ordinarily resident) in another country you may also be resident (or ordinarily resident) in the UK. This is sometimes referred to as dual residence.

Earnedincomewould includeincomeyou receiveasasalaryor fromabusinesswhile investmentincome wouldincludeinterest receivedfromabank. Detailsoftheseare foundinpart10of thisguidance.

Youcanfindyourlocal taxofficeinThePhone Book orgoto www.hmrc.gov.uk Detailsofspecialist officesdealingwith particularindividuals aresetoutinpart13of thisguidance.

The terms of a Double Taxation Agreement might affect your final tax position. If you are at all unsure of your position then this guidance should help by providing a starting place to get the information you need. If you need more help please contact us, or speak to your tax adviser.

Thepurposeofthisguidance
Thisguidanceisdesignedtohelpyouasanindividual.Itexplainshow when
youhaveconnectionsoutsidetheUK yourparticularcircumstanceswillaffect
whatUKtaxyouneedtopay.Itappliesonlytoindividualssoitdoesnotcover
trustees(exceptintheircapacityasindividuals),companies,clubs,societiesor
othertypesoflegalperson.NordoesitcoverInheritanceTax.
Thisguidancedoesnotaffectyourrightofappealagainstany
HMRevenue&Customs(HMRC)decision.
YouareresponsibleforyourowntaxaffairsintheUK.Youshouldkeep
supportingdocuments.Wemightaskyouaboutyourtaxaffairsatsometime.
Thisguidancewilltellyouthemainfactorstotakeintoaccountwhendeciding
yourresidence,ordinaryresidenceanddomicilestatus,andthepotential

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Youcanfindmore informationabout InheritanceTaxat www.hmrc.gov.uk/ inheritancetax/ index.htm

consequencesforyourUKtaxposition.Itisgeneral guidancewhichisdesigned tohelpyoureachadecisionyourself.Dependingonyourcircumstancesthis mightnotbestraightforwardandourguidancemaynotcoverallofthe issueswhichaffectyou.Ifthisisthecaseyoumightneedtocontactusfor moreinformationorseektheservicesofaprofessionaltaxadviser.

1.1SelfAssessmentintheUKandhowtoappeal
Guidanceisavailableon ourwebsitetohelpyou decideifyouneedto completeaSelf Assessmenttaxreturn. Thereisalsoguidanceto helpyouworkoutyour taxliability.Weaskyou togiveusenoughdetail ofyourincomeand circumstancestoallow ustocheckyourreturn. Youcanfindmore guidanceondomicile andUKordinary residenceat12.5and 12.15.

Dependingonyourcircumstances,youmayhavetocompleteaSelfAssessment
taxreturn.Thedateforfilingapaperreturnisnormally31Octoberfollowing
theendofthetaxyearforwhichyouaremakingthereturn.Ifyoufileyour
taxreturnonline,thedeadlineforfilingisnormally31Januaryfollowingthe
endofthetaxyearforwhichyouaremakingthereturn,andthefilingprocess
assistsyouwiththetaxcalculationprocess.NotalltheSelfAssessmentpages
relevanttothisguidanceareavailableinouronlinesystem.Ifyouneedtofill
inonethatisnotavailableyouwillhavetouseexternallysuppliedsoftwareor
submitapapertaxreturn.
Afterprocessing,wemayselectyourcompletedreturnforfurtherexamination.
TheSelfAssessmentsystemrequiresyoutomakeadecisiononwhetherornot
youare residentintheUK.Ifyouareresidentyoumayalsohavetodecide
whetheryouarenotdomiciledand/ornotordinarilyresidentintheUKasthis
mayaffecthowanyforeignincomeand/orgainsthatyouhavearetaxedinthe
UK.Ifyoudecidethatyouarenotresident,ornotordinarilyresident,ornot
domiciledintheUK,wemayaskyoutoprovideevidencetosupportthis.
Yourdealingswithuswillnormallyberoutine.Buttheremaybetimeswhen
youdisagreewithadecisionwehavemade.Ifthishappens,youmaybeableto
challengethedecisionbyappealing.
Inmostcasesyourappealwillbesettledbyreachinganagreementwithus.But
ifyoucan'tagree,youcanaskforeitherofthefollowing:
a reviewbyus,or yourappealtobeheardbyanindependenttribunal. When we write to you with a decision we will also tell you: if you have a right to appeal how to appeal what time limits apply where to send your appeal. You must send your appeal to us in writing, normally within 30 days of the date of the decision you disagree with. You can either use an appeal form (which you may have been sent with the decision letter) or you can appeal by letter. You can find out how this system works, how to ask for a review, or how to appeal to the tribunal, by looking at factsheet
HMRC1 HM Revenue & Customs decisions What to do if you disagree.

Youcangetfactsheet HMRC1aboutreviews andappeals.Goto www.hmrc.gov.uk Youcanalsoobtainthe factsheetbyvisitingyour nearestEnquiryCentre orbyphoningtheHMRC Helplinewhosenumber youwillfindinThe PhoneBook. Youcanfindmore informationaboutthe appealsprocess.Goto www.hmrc.gov.uk

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1.2Anintroductiontoresidence
Youcanfindfulldetails onbeingnotordinarily residentintheUK,being notdomiciledintheUK andonhowtoclaimthe remittancebasisandthe affectsofdoingsoin parts3,4and5of thisguidance. Anexplanationofwhat wemeanby: accrueisat12.2, arisingbasisisat12.3 and remittancebasisat 12.20.

Thetermsresidenceandordinaryresidencearenotdefinedinthe TaxesActs.Ourguidanceonthesetermsislargelybasedonrulingsofthe courts.Thisguidancetellsyouthemainfactorstotakeintoaccountwhen decidingyourresidenceandordinaryresidencestatus.Yourstatusis determinedbythefactsofyourparticularcase.Itisnot simplyaquestionof thenumberofdaysyouspendinthecountry. IfyouareresidentintheUKyouarenormallytaxedonthearisingbasis (see12.3).ThismeansthatyouwillpayUKtaxonallofyourincomeasit arisesandonyourgainsastheyaccrue,whereverthatincomeandthosegains areintheworld.Therearesomeexceptionstothiswhicharecoveredin thisguidance. ItispossibletoberesidentintheUK,butnotordinarilyresident here (see12.15)and/ornotdomiciled here(see12.5).Ifatleastoneofthese circumstancesappliestoyou,youhaveachoiceofwhethertousethearising basisoftaxationortheremittancebasis(see12.20)oftaxation.Youcanfind fulldetailsoftheremittancebasisinpart5ofthisguidance.

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2ResidenceintheUK

ItisimportantthatyouunderstandwhatwemeanbyresidentintheUK becausethiswilldeterminewhatUKtaxyouhavetopay.Thereisnostatutory definitionofresidence.Instead,ittakesitsnormal,everydaymeaning.


Specialtreatmentapplies topeoplewhentheyfirst arriveintheUKand whentheyleavetheUK see2.4

ItispossibletoberesidentintheUKunderourtaxrulesandatthesametime beresidentinanothercountryunderthatcountrystaxrules.Thisissometimes referredtoasdualresidence. IfyouareresidentintheUKandanothercountry,youwillneedtolookatthe guidanceinpart9whichtellsyouaboutDoubleTaxationAgreements(DTAs). IfaDTAexistsbetweentheUKandtheothercountrytheremaybeprovisions intheagreementtodeterminewhereyouwillpaytax.Ifyouarealsoresident inanothercountry,youshouldnotethatUKandforeigntaxyearsmightnotbe thesame.

2.1UKresidencetaxliability
WhenyouareresidentintheUKyouarenormallytaxedonthearisingbasis oftaxation,meaningyouwillpayUKtaxon: yourincomewhicharisesintheUK yourincomewhicharisesoutsidetheUK gainswhichaccrueonthedisposalofyourassetsanywhereintheworld. But,ifyouareresidentintheUKandyouare: notdomiciledintheUKand/or notordinarilyresidentintheUK therearespecialruleswhichmightapplytoyourforeignincomeandgains. TheseallowyoutopayUKtaxonlyontheamountofyourforeignincomeand gainsthatyou,oranotherrelevantperson,brings(orremits)totheUK.Even ifthesespecialrulesdoapplytoyou,youwillstillhavetopayUKtaxonany ofyourincomeandgainswhicharise/accrueintheUK.Thismethodofdealing withyourforeignincomeand/orgainsiscalledtheremittancebasis.

Youcanfindmore informationaboutthe remittancebasisinpart 5ofthisguidance.You canalsofindinformation aboutwhatwemeanby domicileinpart4and whatwemeanby ordinaryresidencein part3. Guidancespecificto peoplewhentheycome toordepartfromtheUK isavailableinparts7 and8. Forinformationabouta UKtaxyearsee12.26. Forwhatcountsasaday see2.2.1.

2.2UKresidence
Therearemanydifferentfactorswhichwilldeterminewhetheryouareresident intheUK.Withoneexception(explainedinthenextparagraph),itisnot simplyaquestionofthenumberofdaysyouarephysicallypresentintheUK duringataxyear,althoughthisisanimportantconsideration. Theonlyoccasionwhenthenumberofdaysthatyouarephysicallypresentin theUKwilldetermineyourresidencestatusiswhenyouareherefor183days ormoreduringataxyear.Ifyouareherefor183daysormoreinataxyear, youareresidentintheUK.Therearenoexceptionstothis. YoucanalsoberesidentintheUKifyouarepresenthereforfewerthan 183daysinataxyear.Thiswilldependonhowoftenandhowlongyouare here,thepurposeandpatternofyourpresenceandyourconnectionstothe UK.Thesemightincludethelocationofyourfamily,yourproperty,your worklifeandyoursocialconnections.

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Thefollowingareexamples,buttheyarenotacompletelist.Theseand anyotherrelevantfactorsmustallbeconsideredtogethertogivea completepicture. Familytiesincludehavingaspouse,civilpartner,childrenorotherfamily membersyouarecloseto,intheUK. Socialtiesincludemembershipofclubsandsocietiesandeventsthatyou regularlyattendorhost.Italsoincludesanyregularrecreationalengagement, suchasreturningeachyearforanannualsportingseason. Businesstiesincludeowningorbeingadirectorofabusinessbasedinthe UK,orhavingemployment,includingselfemployment,intheUK.Regular employmentdutiesintheUKareatieandyouneedtoconsidertheextent, frequencyandnatureofthoseduties.Itdoesnotmatteriftheduties themselvesarenottaxed,forexamplebecauseofaDTA. Propertytiesincludeahouseorapartmentthatyouownorlease,orproperty heldprimarilyforinvestmentbutthatalsoprovidesyouwithaccommodation whenyouareintheUK.Ahouseorapartmentprovidedforyouruseforthe durationofyourtimeintheUKaspartofanemploymentpackageis availableaccommodationandisatietotheUK. IfyouthinkthatyoumayjustbevisitingtheUKthenpart7willhelpyouto considerthepatternofyourvisits,butyoumustalsoconsiderthepurposeof thosevisits.Forinstance,ashorttermoneoffemploymentassignmentto completeaprojectforaforeignemployermightnotinitselfmakeyou resident.ButifyourepeatedlycometotheUKforregularbusinessmeetings thenyourvisitshaveanontemporarypurpose.Youneedtolookatthe frequencyofthosevisitsalongsideyourothertiestotheUK. IfthenatureanddegreeofyourtiestotheUKshowthatitisusualforyouto liveintheUK,youareresidentintheUK.Itdoesnotmatterwhetheryoulive hereforemployment,leisure,orjustbecauseyoulikebeingintheUK. IfyouhavepreviouslybeenresidentintheUKthentobecomenotresidentyou mustleavetheUK,eitherbymakingadefinitebreakorbytakingupfulltime workabroad seepart8.

2.2.1Daysofpresence
Daysyouhavespentin theUKbecauseof exceptional circumstancesbeyond yourcontrolmaybe disregarded.Thisdoes notapplyifthetotal daysintheUK,including thoseduetoexceptional circumstances,areequal toorexceed183days.

WhenyoucountthenumberofdaysthatyouhavebeenpresentintheUK duringataxyearyoumustincludeallofthedaysinwhichyouhavebeenin theUKattheendoftheday(thatis,midnight).Itisthenumberofdays countedinthiswaythatisimportant,notthenumberofvisitsyoumaketothe UK.Thisappliesfrom6April2008. Thisisthegeneralpractice,butitwillnotnecessarilybeappropriateinall cases.Ifyouspendverysignificantamountsoftheyeartravelling internationally,youshouldkeeparecordbothofthedaysyouwerepresentin theUKandofthosedayswhereyouarehereatmidnight.Bothwillbefactors whenlookingatthepatternandpurposeofyourvisits. Fortaxyearsbefore6April2008,youwouldnotnormallycountanydayson whichyouarrivedinordepartedfromtheUK.

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2.3PassengerstravellingthroughtheUK
Foreigncountriesinclude theChannelIslandsand theIsleofMan,see12.1.

Undertheruleswhichapplyfrom6April2008,ifyouareapassenger travellingbetweentwoforeigncountriesviatheUK,andyouarriveintheUK ononedayandleaveforyournextforeigndestinationonthefollowingday, youwillnothavetocountthedayyouarrivedintheUK.Thisapplieseven thoughyouwerestillintheUKatmidnightattheendofthatday.Neitherwill youcountthedayyouleavetheUK.Butthisdoesnotapplyifyouengagein anyactivitieswhileintheUKthatarenotsubstantiallyrelatedtocompleting traveltoaforeigndestination.Soifyouattendabusinessmeeting,visita propertyyouown,arrangetomeetpeoplesociallyorattendsocialactivities, youmustcountthatdayasadayofpresenceifyouareintheUKattheendof theday.
Example
YouareresidentoftheIsleofManandtraveltotheUKaspartofajourneytotheUSA.You havetostayovernightintheUKbeforecatchingaflighttotheUSAthefollowingday.Your beingintheUKforthatonenightwouldnot countasadayofpresenceintheUK.But,ifyou weretocarryoutanactivitysuchasattendingabusinessmeeting,visitingthetheatreor visitingfamilybeforecatchingtheflighttotheUSA,theexceptionwouldnot applyandthe nightspentintheUKwould becountedasadayofpresence.

2.4 ResidenceYearsofarrivalinanddeparturefromtheUK
Youcanfindinformation onExtraStatutory Concessions(ESC)inthe followingguidance. ExtraStatutory Concessionsand StatementsofPractice www.hmrc.gov.uk/ thelibrary/esc.htm Youcanfindmore informationonwhatyou mustconsiderwhenyou cometoorleavetheUK parts7and8ofthis guidance.

Strictly,youaretaxedasaUKresidentforthewholeofataxyearwhenyou areresidenthereforanypartofit.But,ifyouleaveorcometotheUK partwaythroughataxyear,theyearmay,byconcession,besplit (ExtraStatutoryConcessionA11).ThismeansthattheUKIncomeTaxyou shouldpaybecauseyouareresidenthereiscalculatedonthebasisoftheperiod youarelivinghereratherthanthewholeofthattaxyear.Thishastheeffectof splittingthetaxyearintoresidentandnotresidentperiodsforthepurposesof calculatingthetaxdue. Thissplityeartreatmentwillapplytoindividualswho: cometotheUKtotakeuppermanentresidenceortostayforatleast twoyears,or leavetheUKtobecomepermanentlyresidentabroad,or leavetheUKforfulltimeserviceunderacontractofemploymentforatleast acompleteUKtaxyearandanyinterimvisitstotheUKintheperioddonot amountto183daysormoreinanytaxyearoranaverageof91daysor moreinataxyear. ThereisafurtherExtraStatutoryConcession(A78)whichalsoallowssplit yeartreatmentifyouareaccompanyingyourspouseorcivilpartnerwhenthey leavetheUKtoworkfulltimeabroad,orintheyearofreturntotheUK.

Youcanfindmore informationabout CapitalGainsTaxat www.hmrc.gov.uk

Althoughtherulesforcapitalgainsaresignificantlydifferentfromthosefor income,thereisasplityearconcessionwhichrelatestothechargeablegainsof peoplewhocometo,orleave,theUKduringataxyear(ExtraStatutory ConcessionD2).

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3 OrdinaryresidenceintheUK

3.1HowordinaryresidenceaffectsUKtaxliability
WhenyouareresidentintheUK,whetherornotyouareordinarilyresident intheUKisgenerallyrelevantonlyifyouhaveforeignincome duringa taxyear. IfyouareresidentbutnotordinarilyresidentintheUKyoumayclaimthe remittancebasisforyourforeignincome.ButyouwillalwayspayIncomeTax onyourUKincome.
Youcanfindmore informationabouthow foreignincomeistaxed intheUKinpart10. Youcanfindmore informationonthe remittancebasisin part5.

WhenyouareresidentintheUKbutnotordinarilyresidentyoucannotusethe remittancebasisoftaxationforyourforeigngainsunlessyouarenot domiciledhere. Themainexceptionstothisgeneralpositionrelatetotheapplicationofthe antiavoidancelegislationontransfersofassetsabroadandthestatutory provisionsdealingwiththeattributionofincomeandgainstosettlorsor beneficiariesoftrusts.Thesearecomplexmatterswhicharenotdealtwith inthisguidance.Iftheyapplytoyou,youmightwishtoget professionaladvice. EvenifyouarenotresidentintheUK,youmaybeordinarilyresident,and ifso,youmaybeliabletoCapitalGainsTaxonthedisposalofUKand/or foreignassets.

3.2Whatdoesordinaryresidencemean?
Ordinaryresidenceisdifferentfromresidence.Thewordordinaryindicates
thatyourresidenceintheUKistypicalforyouandnotcasual.Itisimportant
nottoconfuseordinaryresidencewithdomicile(seepart4).
IfyouhavealwayslivedintheUKthenyouareordinarilyresidenthere.
WhenyoucometotheUKyoudonothavetointendtoremainintheUK
permanentlyorindefinitelyinordertobeordinarilyresidenthere.Itisenough
thatyourresidencehasallthefollowingattributes.
Yourpresenceherehasasettledpurpose.Thismightbeforonlyalimited period,buthasenoughcontinuitytobeproperlydescribedassettled. Business,employmentandfamilycanallprovideasettledpurpose,butthis listisnotexhaustive. YourpresenceintheUKformspartoftheregularandhabitualmodeofyour lifeforthetimebeing.ThiscanincludetemporaryabsencesfromtheUK.For exampleifyoucometoliveintheUKforthreeyearsormorethenyouwill haveestablishedaregularandhabitualmodeoflifeherefromthestart. YouhavecometotheUKvoluntarily.Thefactthatyouchosetocometothe UKattherequestofyouremployerratherthanseekanotherjobdoesnot makeyourpresencehereinvoluntary. Thepatternofyourpresence,bothintheUKandoverseas,isanimportant factorwhenyouaredecidingifyouareordinarilyresidentintheUK.Youwill also need to take into account your reasons for being in, coming to, or leaving the UK and your lifestyle and habits. Parts 7 and 8 will help you with this, as they explain the considerations for those coming to and leaving the UK. You can be ordinarily resident in the UK and, at the same time, be ordinarily resident in another country.

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ItispossibletoberesidentintheUKandbenotordinarilyresidenthere.This meansthatalthoughyouareresidentintheUKduringataxyear,your residencedoesnothaveoneormoreofthefactorsthatwouldmakeyou ordinarilyresident.


Youcanfindguidanceon whatyouneedto considerwhenarrivingin ordepartingfromthe UKinparts7and8.

Itisalsopossible(butunusual)tobenotresidentintheUKbutremain ordinarilyresidenthere.IfyounormallyliveintheUKyoumightbecomenot residentsolelyforonetaxyear.AsyouwouldusuallyberesidentintheUKand thisiswhereyouhaveyournormalhome,familytiesandothersocial connections,youmightstillbeordinarilyresidenthere.

3.3Examplesofordinaryresidence
Theseexamplesareonlyillustrative.Youwillneedtoconsiderallthefactsin yourowncase,includingthepurposeofanypreviousvisits,anyemerging patternsandyourtotalandaveragedaycounts.Itisnotpossibletocoverevery eventualityinthisguidanceandyoumayliketocontactusortakeprofessional adviceifyourcircumstancesarenotobviouslycoveredinthispartofthe guidance.Ifanyofthefactsintheexamplesarechangedthenthestatusofthe individualsmightchange.
Example1
SarahisaBritishcitizenwhohaslivedintheUKmostofherlife.ShehashomesinLondon, California(USA)andFranceandhasspentsubstantialamountsoftimeatherotherhomesor travellingonbusiness. TheopportunityarisesforSarahtotravelmoreonbusiness,especiallyinNorthAmericaandshe thereforespendslesstimeintheUKandmoretimeinherCaliforniahome.Sarahspartnerand theirchildrenarebasedintheUKandthefamilyspendsthesummertogetherinFrance.During theyearended5April2010SarahispresentintheUKattheendof43days,althoughshe typicallyarrivesintheUKinthemorningandleavesintheeveningsomanyofthedayssheisin theUKdonotgetcountedforthe183daytest. Sarahsendofdaycountsfortheyearsended5April2011,5April2012and5April2013are 85,110and90respectively.Theaverageforthefouryearsto5April2013isjustunder82days. AlthoughSarahhasbeenpresentintheUKattheendofthedayforanaverageoflessthan threemonthsduringthefouryearsunderreview,shehasremainedresidentandordinarily residenthere.ThisisbecauseherpresenceintheUKinallyearsshowsapatternindicating residencehereandthatsuchresidenceisordinaryforher.Thereisnothingcasualabouther residence SarahhasahomeandfamilyintheUKtowhichshereturnswhenevershewishes andherbusinessallows.SarahsresidenceintheUKcontinues.HerpresenceintheUKisan integralpartoftheregularpatternofherlife.ThepreciseamountoftimethatSarahspendsin theUKdoesnotaffectthisfundamentalpoint. SarahhasbeenandremainsresidentandordinarilyresidentintheUK.ItispossiblethatSarahis residentinFranceortheUSAforthepurposesofFrenchorUSfederalandstateincometaxes. ThisdoesnotaffectherresidenceintheUK.Ifsheisdualresidentforanyperioditmightbe necessarytodecidewhereSarahistreatedasresidentforthepurposesoftherelevantDouble TaxationAgreement.

Formoreinformation aboutdoubletaxation seepart9.

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Example2
JuanisaSpanishcitizenandissecondedbyhisSpanishemployertoworkonaprojectintheUK forapproximatelyninemonthsfromearlyJune2009.JuanswifeandfamilyremaininSpainand hereturnstheretovisitthemeverytwoweeks.HetakestwoweeksholidayinAugust2009 whichhespendsoutsidetheUKandanothertwoweeksatChristmaswhichhespendsinSpain withhisfamily. WhenhefirstarrivesintheUK,Juanstaysinhotelsbuthethentakesasixmonthleaseonan apartmentherethatheextendsfortwomonthsinearly2010.Theprojectiscompletedand JuanreturnstoSpaininmidMarch2010. Juanhasspentmorethan183daysintheUK.Heisresidentfortheyearended5April2010 butheisnotordinarilyresident. JuantakesupanewemploymentinSpaininJuly2010.Hisnewemployersecondshimtotheir UKbusinesstoresolveacrisisinthebusiness.HiswifeandfamilyagainremaininSpain,buthe isnotabletovisitthemveryoftenandtheyvisithimintheUKonceamonth.Betweenearly September2010and5April2011Juanspendsover183nightsintheUK,eitherinacompany flatorinvarioushotels.HissecondmentendsandhereturnstoSpainattheendofMay2011. JuanisresidentintheUKfortheyearended5April2011butheisnotordinarilyresidenthere. HisresidenceintheUKdoesnotyethaveasufficientlysettledpurpose;itisstillnotordinary forhim.

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4 Domicile
4.1HowdoesdomicileaffectyourUKIncomeTaxand CapitalGainsTaxliability?
Yourdomicilestatusmay alsoberelevantfor InheritanceTaxYoucan findmoreinformationat www.hmrc.gov.uk/ inheritancetax/ index.htm Ifyouneedmore detailedinformationon domicileforIncomeTax andCapitalGainsTax purposesyoushould refertotheResidence, DomicileandRemittance BasisManual whichyou canfindat www.hmrc.gov.uk

ForIncomeTaxandCapitalGainsTaxpurposes,whetherornotyouare domiciledintheUKisgenerallyrelevantonlyifyouhaveforeignincome and/orgainsduringataxyear.Ifyoudonothaveforeignincomeand/orgains thenyourdomicilestatushasnobearingonyourUKIncomeTaxor CapitalGainsTaxpositionandyoudonotneedtoconsiderit.Theinformation inthisguidancedoesnotcoverInheritanceTax. Theguidanceweprovideherewillhelpyou,whenyouraffairsare straightforward,toreachadecisiononyourdomicilestatus.Ifyouraffairsare morecomplex,wedirectyoutowhereyoucanobtainmoreguidance.Wealso recommendthatyouspeaktoussothatwecangiveyoumoreguidanceorthat yougetadvicefromaprofessionaltaxadviser. ThefactthatyouwerebornintheUK,havelivedhereformostofyourlifeor arenowlivingherepermanentlygivesagoodindicationthatyoumightbe domiciledintheUK,butthisisacomplicatedlegalissueandyoumightwant togetprofessionaladviceifyouareunsureaboutyourdomicilestatus. If you have foreign income and/or gains then your domicile might have a bearing on what UK tax you pay on those foreign income and/or gains. If you are resident but are not domiciled in the UK, although you will still have to pay UK tax on any income and/or gains which arise or accrue here, you might wish to claim the remittance basis of taxation for your foreign income and/or gains (see part 5). We are unlikely to challenge any person who says they have a UK domicile. But if you say that you have a nonUK domicile, we might need to check whether or not that is correct, particularly if you were born in the UK. By its very nature a check aimed at establishing your domicile will be an indepth examination of your background, lifestyle and intentions over the course of your lifetime. Any check of this sort will extend to areas of your life, and that of your family, that you might not normally think are relevant to your UK tax affairs. We will need to ask these questions and sometimes ask you to provide us with evidence as part of a check into your domicile status.

4.2Whatdoesdomicilemean?
Domicileisamatterofgenerallaw;notoftaxlaw.Therearemanythings whichaffectyourdomicile.Someofthemainpointsthatyoushouldconsiderif youareclaimingnottobedomiciledintheUKareshownbelow: Youcannotbewithoutadomicile. Youcanonlyhaveonedomicileatatime. Youarenormallydomiciledinthecountrywhereyouhaveyour permanenthome. Yourexistingdomicilewillcontinueuntilyouacquireanewone. Domicileisdistinctfromnationalityandresidence,althoughbothcanhave animpactonyourdomicile. Thefactthatyouregisterandvoteasanoverseaselectorisnotnormally takenintoaccountwhendecidingwhetherornotyouaredomiciledin theUK. AnyreferenceswemaketobeingdomiciledintheUKarereferencestobeing domiciledinany partoftheUK.

TheUKhasthree territoriesfordomicile: EnglandandWales; Scotland;and NorthernIreland.

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4.3Whattypesofdomicilearethere?
Therearethreetypesofdomicile.Theseare: domicileoforigin domicileofchoice domicileofdependence.

4.3.1Domicileoforigin
Younormallyacquireadomicileoforiginfromyourfatherwhenyouareborn (seealsodomicileofdependence).Itneednotbethecountryinwhichyou werebornforexampleyoumighthavebeenborninacountrywhichwasnot thecountryinwhichyourfatherwasdomiciledatthetimeofyourbirth.A domicileoforiginmaychangeasaresultofadoption,butotherwiseisnoteasy todisplace,althoughitcanoccur.Ifyouleavethecountryofyourdomicileof origin,youwillcontinuetobedomiciledthereuntilyouacquireadomicileof choiceelsewhere(see4.3.2). ThefactthatyouwerebornintheUKdoesnotautomaticallymeanthatyou aredomiciledhere.YoumighthavebeenbornintheUKtoanonUK domiciledfatherandthenmovedtoanothernonUKcountry.Regardlessofthe factthatyouwerebornintheUK,yourdomicileoforiginwouldbethesame asyourfather nonUK.IfyoureturntotheUKandarenotplanningto remainherepermanentlyorindefinitely,thenyouwillcontinuetobedomiciled outsidetheUK. Ifyourparentswerenotmarriedatthetimeofyourbirth,youwouldacquire yourdomicileoforiginfromyourmother.
Exampledomicileoforigin
IfyouwerebornintheUKandyourfatherwasanonUKdomiciledsoldierofaforeignnation servingintheUK,yourdomicileoforiginwouldbethesameasyourfather nonUKandinthe placeyourfatherwasdomiciled. IfyournonUKdomiciledfatherdieswhenyouareachild,andyouareadoptedbyaUK domiciledfather,yourdomicileoforiginwillchangetoaUKdomicileasaresultofyour adoption.Youroriginaldomicileoforiginhasbeenchanged.

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4.3.2Domicileofchoice
Youhavealegalcapacitytoacquireanewdomicileattheageof16(earlier inScotland).Broadly,toacquireadomicileofchoice,youmustleaveyour currentcountryofdomicileandsettleinanothercountry.Or,ifyouarealready livinginacountryotherthanthatofyourdomicile,youwillacquireadomicile ofchoicethereifyouintendtoremainpermanentlyorindefinitely.Ineither caseyouneedtoprovidestrongevidencethatyouintendtolivethere permanentlyorindefinitely.Thefollowingfactorswillberelevant,thoughthis listisnotexhaustive. Yourintentions. Yourpermanentresidence. Yourbusinessinterests. Yoursocialandfamilyinterests. Yourownershipofproperty. Theformofanywillthatyouhavemade.
Example domicileofchoicewhennotlivinginthecountryofyour domicileoforigin
IfyouwerebornintheUKandyourfatherwasanonUKdomiciledpersonworkingintheUK whileyouwereachild,yourdomicileoforiginwouldbethesameasthenonUKdomicileof yourfather. Youwerebroughtup,educatedandstartedworkintheUK.Whenyouwere21yourfather retiredfromhisjobanddecidedtoreturntohiscountryofdomicile.Youhavesinceboughta homeandmarriedandyouhavemadetheUKyourpermanenthomewhichyoudonotintend toleave.Youwillnotbejoiningyourfatherabroadforanythingotherthananoccasionalvisit. BydecidingtostayintheUKpermanentlyorindefinitelyyouhaveestablishedadomicileof choiceintheUK.

4.3.3Domicileofdependence
Untilyouhavethelegalcapacitytochangeit,yourdomicilewillfollowthatof thepersononwhomyouarelegallydependent.Ifthedomicileofthatperson changes,youwillautomaticallyacquirethesamedomicile,andyourdomicile oforiginwillbecomedormant.Before1974,amarriedwomanautomatically acquiredherhusbandsdomicile.Asamarriedwoman,whomarriedbefore 1974,youwouldretainyourhusbandsdomicileuntilyoulegallyacquireanew domicile.But,ifyouareawomanwhomarriedonorafter1January1974, yourdomicileisnotnecessarilythesameasyourhusbands.Yourdomicilewill bedecidedinthesamewayasanyotherindividualwhoisabletohavean independentdomicile. Anexceptiontothegeneralpositionupto31December1973isgivenbythe DoubleTaxationAgreementbetweentheUKandtheUSA,whichprovidesthat amarriagebefore1974betweenawomanwhoisaUSnationalandaman domiciledwithintheUKisdeemedtohavetakenplaceon1January1974.
Exampledomicileofdependence
YouareawomanwithadomicileoforiginoutsidetheUKwhomarriedamandomiciledwithin theUKinJanuary1970.UponmarriageyoubecameUKdomiciledyourdomicileof dependencebeingthesameasyourhusbandsdomicile. Asfrom1January1974youcanacquireanindependentdomicileofchoice,whichcouldbe differentfromyourhusbandsdomicilebysettlingelsewhere.

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4.4Domicileflowcharts
Thefollowingflowchartshavebeenincludedtohelpyouunderstanddomicile. Notestodomicileflowcharts 1 Domicileisagenerallawconcept.Itisnotdefinedintaxlaw.Itcanbea complexsubject,sothechartscangiveyounomorethanalikelyindication ofyourdomicile.IntheUK,onlyacourtmaymakeaformalrulingon yourdomicile. 2 Yourdomicilestatusdependsonthefactsofyourindividualcase.Itis thereforenotpossibletosetoutinthisguidesomethingthatwillprovidea definitiveanswerinallcircumstances.Butthefollowingflowchartgivesas stronganindicationaspossible,basedonvariousgenericfactors.Thechart willgivetherightanswerforthemajorityofpeople,butitmaynotforyouif youraffairsaremorecomplicated. 3 Yourdomicilemaybedependentonsomeoneelsesdomicile(usuallyyour father).Butdefiningdomicilestatusbasedondomicileasastartingpoint mightnotseemhelpful.So,thechartprovidesasequenceofquestions withoutreferencetodomicileitself. 4 If,usingthechart,youarriveattheconclusionthatyouaredomiciledinthe UKorprobablydomiciledintheUKyoumaysimplyacceptthat conclusion.Ifyoudo,youshouldnottickthenondomiciledboxonthe formSA109.Youwillthenbetaxedonthearisingbasis.Conversely,ifthe chartleadsyoutotheconclusionthatyouaredomiciledabroador probablydomiciledabroad,youmayfeelthatthisconfirmsyourownview. Or,youmayconsiderconsultingmoredetailedguidanceorataxadviser. Eitherway,youarestillresponsibleforensuringthatanydeclarationsyou make are correct. 5 If your parents were not married at the time of your birth, referencesto father should be read as mother. 6 If you were adopted, father should be read as adopted father. 7 If your fathers domicile changed when you were a child, you should not use the chart, as the apparent conclusion could be misleading. 8 Your domicile relates to a particular territory. In most cases, this will be a country, but in federal countries it relates to the individual state. The UK is not a federal system, but it has three territories for domicile: England and Wales; Scotland; and Northern Ireland.

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These tables are indicative only. You should not rely on them alone if you are making a legal declaration about your domicile.

Where is my domicile?

Chart 1 Start

Is this a settled longterm commitmentor ashorterterm plan? No

Longterm commitment

Youare domiciled intheUK

To remain in the UK Wherewasyour fatherborn? Shorterterm plan IntheUnited Kingdom Have you ever been resident abroad as an adult?

Whatareyour plansforthe future? IntheUnited Kingdom

Nofirmplans

Abroad,whilehis fatherwas workingoutside theUKfora limitedperiod

Yes

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ToleavetheUK Abroad

Wherewereyou born? Abroad,otherthan whenhisfather wasworking outsidetheUKfor alimitedperiod Youareprobably domiciledinthe UK

Go to Chart 4

Go to Chart 3

Go to Chart 2

These tables are indicative only. You should not rely on them alone if you are making a legal declaration about your domicile.

Whereismydomicile? BornintheUnitedKingdom Fatherbornabroad Nofirmplans

Youare domiciled intheUK United Kingdom In which


country are
most of your
personallinks? Another country

Chart 2 Start

You are probably domiciled in the UK

Have you ever


been resident
abroad as an
adult? No Was that
residence in
your fathers
placeofbirth? Yes In which country are most of your personal links?

No

United Kingdom Youareprobably domiciledabroad Another country

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Yes

Doyouhave currentpersonal linkswiththat country?

No

Youareprobably domiciledinthe UK

Yes

Youareprobably domiciledabroad

These tables are indicative only. You should not rely on them alone if you are making a legal declaration about your domicile.

Whereismydomicile? Bornabroad Nofirmplans

Chart 3 Start

In the United Kingdom No

You are probably domiciled in the UK

Where was your father born? No

Do you have current personal links with the country or territory of your own birth? Yes

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You are probably domiciled abroad

Abroad

Do you have current personal links with the country or territory of your fathers birth? Yes

No

Do you have current personal links with the country / territory of your own birth?

Yes

You are domiciled abroad

These tables are indicative only. You should not rely on them alone if you are making a legal declaration about your domicile. IntheUnited Kingdom No You are domiciled in the UK Yes No

Whereismydomicile? PlanstoleavetheUnitedKingdom

Have you ever been resident abroad as an adult? Yes

Chart 4 Start

Abroad, while his father was working outside the UK for a limited period No While abroad did you settle there, and now plan to return to that territory* permanently?
*Territory see note 8

In the United Kingdom

Where was your father born?

Wherewere youborn?

Abroad, other than when his father was working outside the UK for a limited period Yes No

Do you intend to live in the country or territory of your fathers birth when you leave the UK?

You are probably domiciled abroad

IntheUnited Kingdom

Haveyou everbeen resident abroadasan adult?

You are probably domiciled in the UK

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Yes

Yes

No

Abroad

Where was your father born?

Abroad, while his father was working outside the UK for a limited period

In which country are most of your personal links?

United Kingdom You are probably domiciled abroad Another country

While abroad did you settle there, and now plan to return to that territory* permanently?
*Territory see note 8

Abroad, other than when his father was working outside the UK for a limited period

You are domiciled abroad

Examplesrelatingtothedomicileflowcharts
Theflowchartsshowasimplifiedprocessthatshouldgiveyouanindicationof yourdomicileandthedegreeoflikelihoodthatyouneedtofindmore guidance.Theyaredesignedtohelpthemajorityofusersbutcannotcoverall thecircumstancesthatmightexist.Youneedtobecarefulwhenusingthe flowchartsandtotakeaccountoftherelevantfactsasillustratedbythe examplesbelow. Youcannotassumethat,becauseyouoryourfatherwasbornoutsidetheUK, youarenotdomiciledintheUK. Stefanistypicalofthemajorityofindividualswhocometoliveandworkin theUKwithoutintendingtoremainhereindefinitely.Hewillbehereforafew yearsandwillthenreturntohishomeland.Workersinotherbusinesssectors willbeinternationallymobileandwillnotcometotheUKfromtheir homelandsorreturntothemuponleavingtheUK.But,theflowchartswill,in themajorityofcases,givesuchindividualstheguidancetheyneed.Colin, LouiseandAlunhavemorecomplicatedpersonalhistoriesandcircumstances andtheyarelikelytoneedtolookatdetailedguidanceorconsulta professionaladviser.
StefanisanelectricianwhowasborninPolandandwhointendstoreturnthereinthreeorfour years.HisfamilybackgroundisPolishandhisimmediatefamilyliveinPoland. ColinisaninvestmentbankerwhowasborninNewYorkandwhointendstoretiretoFranceat theageofsixty,justoverfiveyearsfromnow.HehaslivedinLondonformuchofhislife, althoughhehasspentseveralperiodslivingabroadbecauseofhisemployment. BothStefanandColinconsiderflowchart1andconcludethattheyshouldgotoflowchart4. Bothwerebornabroadandsoeachhastoconsiderhisfathersplaceofbirth.Stefansfatherwas borninPolandbecauseStefansgrandfatherlivedhisentirelifeinPoland,justasseveral generationsofhisfamilyhaddone.ColinsfatherwasborninIreland,intoawealthyfamilythe membersofwhichdividedtheirtimebetweenIrelandandEngland. StefanbelievesthatmostofhispersonallinksarewithPolandandconcludesthatheis domiciledoutsidetheUK.Thisisanuncontroversialconclusion. ColinhaspersonallinkswithEngland,Ireland,FranceandNewYork.Hethinksthat,onbalance, mostofhispersonallinksarewithEnglandbutreachestheconclusionthatheisprobably domiciledabroad.But,Colinshouldbearinmindthatthisisonlyanindicationofhisdomicile andhemightthereforewishtoconsidertheissueinmoredetail,particularlyinviewofhis lifelonglinkswithEngland.Thismightincludeconsultingmoredetailedguidanceorgettingthe opinionofaprofessionaladviser.

LouiseisamusicianwhoislivingintheUKwithoutanyfirmplansaboutherfuture.Louisewas borninScotlandbutherfatherwasborninSweden.LouisesgrandfatherwasSwedish,aswere Louisesancestorsasfarbackasshecantracethem.Louisesfatherwasaninternationalbusiness executiveandsothefamilylivedinvariouscountriesduringherchildhood,ofwhichtheUKwas one.Louisehaslivedinseveralcountriesasanadult,althoughnotyetinSweden.Louiseisan onlychild.Herparentsarebothdeadandshehasonlyonesurvivingaunt.Louiserarelyvisits hersmallextendedfamilyinSweden.Louisesbackground,professionandlifestylemeanthat shehasalwaystendedtodeveloplinkswiththeplaceinwhichsheislivingforthetimebeing. LouiseconcludesthatsheisprobablydomiciledintheUK,onthebasisofflowchart2.Asthisis onlyaprobability,andgiventhepossibilitythatneithershenorherfatherhaseversettled anywhereoutsideSweden,Louisemightwishtoconsultmoredetailedguidanceorgetthe opinionofaprofessionaladviser.

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AlunwasborninNewSouthWales.AtpresentheintendstoremaininEnglandforatleast anothertwoyearsandgoesfromflowchart1toflowchart3.AlunsfatherwasGreekbutAlun hasretainedveryfewlinkswithGreece;hevisitshisextendedfamilyonceeverytwoorthree years.AlunstwosistershavelivedinWesternAustraliaformanyyears.AfterAlunsfathers death,Alunsmotherwenttolivewithhiseldersister.AlunownspropertyinWesternAustralia andhasaninterestinabusinessthere.Thefamilyhasverylittleremainingconnectionwith NewSouthWales,althoughAlunisintouchwithacoupleoffriendsfromhischildhoodwholive there.Alunfindsitdifficulttoreachaconclusionabouthisdomicile,ashehaslinkswith AustraliabutnotspecificallywithNewSouthWales.Alunconsultsmoredetailedguidanceand realisesthathiscurrentintentionsshouldnotbeconsideredinisolation.HisresidenceintheUK foroverthreedecadesandhisintentionsduringthatperiodhavetobetakenintoaccount.Alun concludesthatheisdomiciledintheUK,whichistheconclusiontowhichflowchart1would haveledhimifhehadconsideredhislongtermcommitmenttotheUKfromtheoutset.This conclusionisreinforcedbyAlunsrelativelackoflinkswiththeterritoryofhisbirth.

JohnwasbornintheUKandhaslivedhereallhislifeapartfromayearspenttravellingaround Europeandannualholidaysspentabroad.HisfatherwasalsobornintheUK.Johnplansto retiretoFranceandhasalreadypurchasedahousetherewhichhe,andhisentirefamilyvisit whenevertheycan.WhileJohnhasclearandfirmplanstomovetoFranceheiscurrently domiciledintheUKandflowchart4leadshimtothatanswer.

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5Theremittancebasis
5.1Whatistheremittancebasis?
Youcanfindan explanationofthe arisingbasisat12.3. Ifyourequiremore detailedinformationon theoperationofthe remittancebasisand howtheremittancebasis workedbefore 5April2008youshould refertotheResidence, Domicileand RemittancesManual at www.hmrc.gov.uk

Ifyouareresident intheUKyouwillnormallybetaxedonthearisingbasis. ThismeansthatyouareliabletopayUKtaxonyourworldwideincomeand gains,wherevertheyariseoraccrue. Theremittancebasisisanalternativetaxtreatmentavailabletopeoplewhoare residentintheUKand whoareeither: notdomiciledintheUK,or


notordinarilyresidentintheUK.
Theremittancebasisisrelevantonlyifyouhaveforeignincomeand/orgains.
Ifyoudonothaveforeignincomeand/orgainsthentheremittancebasisisnot relevanttoyou. Theguidancegivenontheremittancebasisinthischapterdescribeshowthe remittancebasisoperatesfrom6April2008.Itprovidesanoverviewofthe remittancebasistohelpyouifyouhavestraightforwardtaxaffairs.Ifyourtax affairsaremorecomplex,youshouldrefertoourmoredetailedguidanceonthe remittancebasisorgetadvicefromaprofessionaltaxadviser.

5.1.1Whataboutsmallamountsofforeignincome?
IfyouareemployedintheUKbutarenotdomiciledhereandyouonlyhave
smallamountsofforeignincome,youcanbenefitfromanexemption.Ifyou
meetallofthefollowingcriteriaforataxyearyouwillbeautomaticallytaxed
onthearisingbasisforthatyearandyouwillnotneedtocompletethe
SelfAssessmenttaxreturnforyourforeignincomeforthattaxyear.
InthesecircumstancesyouwillnotbeliabletoUKtaxonyourforeignincome,
eitherwhenitarisesorwhenitisbroughttotheUK.
Thecriteriaareshownbelow.
YouareresidentintheUK. YouarenotdomiciledintheUK. YouareemployedintheUK. Youareabasicratetaxpayer(basedonyourworldwideincomeandgains). Yourincomefromoverseasemploymentforthetaxyearislessthan10,000. Ifyouhaveoverseasbankinterestforthetaxyearitislessthan100. Allyouroverseasemploymentincomeandinterestissubjecttoforeigntax. You have no other overseas income or gains. You are not otherwise required to completethe Self Assessmenttax return (see 5.5.1). But if your circumstances are such that you would prefer to be taxed on the remittance basis, you will need to complete a Self Assessment tax return.

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5.2Howdoestheremittancebasiswork?
TheremittancebasiswillaffectyourliabilitytoUKtaxonyourforeignincome
and/orgains.
Whenyouareeligibleandchoosetousetheremittancebasis,youwillbeliable
toUKtaxonall ofyourUKincomeandgainsastheyariseoraccrueeachyear.
ButyouwillonlybeliabletoUKtaxonyourforeignincomeand/orgainsif
andwhenyoubringthem(remitthem)totheUK(see5.9foranintroduction
towhatconstitutesaremittance).

See5.5.1and5.7for detailsofwhathappens ifyouclaimthe remittancebasisand paytheRemittance BasisCharge.

Moreinformationabout DoubleTaxationReliefis availableinpart9of thisguidance.

Evenifyouareeligibletouseit,youdonothavetousetheremittancebasis. YoucanusethearisingbasisandpayUKtaxonyourworldwideincome and/orgains.Thedecisionisyourstomakeandwilldependonyourown personalcircumstancesasusingtheremittancebasismightmeanthatyoupay moretax.Someofthethingsthatyoumightwanttothinkaboutwhenyou makeyourdecisionareshownbelow. Howmuchofyourforeignincomeand/orgainsyouleaveoutsidetheUK (unremittedforeignincomeand/orgains). HowlongyouhavebeenresidentintheUK. WhetherornotyouwillbeabletoclaimDoubleTaxationRelief. Theanswertothesequestionswillhelpyoutoworkoutwhetherornotyou havetomakeaclaimtousetheremittancebasisbycompletinga SelfAssessmenttaxreturn see5.6,whatUKtaxallowancesandreliefsfrom Income Tax youareentitledtoreceive see5.5and6.5,whetheryouare entitled to the Annual Exempt Amount for Capital Gains Tax see 12.4 and whether or not you might have to pay the RemittanceBasis Charge (RBC) see 5.7. If you decide to use the arising basis you will need to make a Self Assessment tax return giving information about your foreign income and/or gains.

5.3Whocanusetheremittancebasis?
Moreinformationon: residenceintheUK seepart2 ordinaryresidence seepart3 domicile seepart4 foreignincome/gains seepart10.

Tousetheremittancebasisyoumusthaveforeignincomeand/orgainsduring thetaxyearandberesidentintheUK,andeither: notdomiciled intheUK(whenyoucanusetheremittancebasisforboth foreignincomeand/orgains),or notordinarilyresident intheUK(whenyoucanusetheremittancebasisfor foreignincome,butcannotuseitforforeigngainsunlessyouarealsonot domiciledintheUK). Ifyouhaveusedtheremittancebasisinearlieryearsandyoubringanyof thoseearlieryearsforeignincomeand/orgainstotheUKatalaterdate,you maystillbeliabletoUKtaxuponthisremittance.

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5.4WhatUKtaxwillyouhavetopayontheremittancebasis?
ThistableletsyoutocompareliabilitytoUKtaxonboththearising andremittancebases,andprovidesanoverviewdependingonindividual circumstances.Youcanfindmoredetailedinformationaboutthetaxationof employmentincome,includingforeignemploymentincome,inpart10, particularlyat10.10.1.
UKresidentanddomiciled RB isremittancebasis andAB isarisingbasis. UKordinarily resident NoteligibletotheRB. AllUKandforeignincome andgainsareliableto UKtaxontheAB. UKresidentbutnotdomiciled EligibletouseRB. IfRB usedallUKincome andgainsareliableto UKtaxontheAB. Foreignincomeandgains areliabletoUKtaxon theRB.

UKnotordinarily resident

EligibletousetheRB. IfRB usedallUKincome andgainsareliableto UKtaxontheAB. ForeigngainsareliabletoUK taxontheAB. ForeignincomeisliabletoUK taxontheRB.

EligibletousetheRB. IfRB usedallUKincome andgainsareliableto UKtaxontheAB. Foreignincomeandgains areliabletoUKtaxon theRB.

5.5Whathappenswhenyouchoosetousetheremittancebasis?
IfyouareemployedintheUK,haveonlysmallamountsofforeignincomeand meettherestofthecriterialistedat5.1.1,thenyoumightprefertobetaxedon thearisingbasis. Whatyouhavetodowhenyouwanttousetheremittancebasiswilldepend onhowmuchunremittedforeignincomeand/orgainsyouactuallyhaveduring thetaxyear.

5.5.1Lessthan2,000unremittedforeignincomeand/orgains arisingoraccruinginthetaxyear
Unremittedforeign incomeand/orgainsare yourforeignincome and/orgainswhichyou leaveoutsidetheUK see12.28. Youcanfinddetailsof exchangeratesat www.hmrc.gov.uk

Ifyourunremittedforeignincomeand/orgainsarisingoraccruinginthe
taxyeararelessthan2,000youcanusetheremittancebasiswithouthaving
tomakeaclaimorcompleteaSelfAssessmenttaxreturn(see5.6).
Ifthisisthecasethenyou:
willbeautomaticallytaxedontheremittancebasis(unlesstherulesat5.1.1 applyinstead) willnotloseyourentitlementtoUKpersonaltaxallowancesortothe AnnualExemptAmountforCapitalGainsTax willnot havetopaytheRemittanceBasisCharge.

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Ifyoudonotmeetthe criteriain5.1.1,butyou havelessthan2,000 unremittedforeign incomeand/orgains whichyouchoosetobe taxedonthearising basis,thenyouwillneed totellusinwriting. Youwillalsoneedto completeaSelf Assessmenttaxreturnto declareyourforeign incomeand/orgainson thearisingbasis.

IncertaincircumstancesyoumightstillhavetocompleteaUKSelfAssessment
taxreturntotellusaboutyourUKincomeandgainsandabout any foreign
income and/or gains which you have remitted to the UK during the tax year.
See the Self Assessment guidance on our website if you think this may apply.
To work out whether your unremitted foreign income in a tax year is below
2,000, you should deduct the total foreign income you have remitted during
the tax year from the total foreign income received, for each currency, during
the tax year. The balance left is your unremitted foreign income. This should
then be converted into pounds sterling at the rate of exchange prevailing on the
last day of the tax year to calculate whether your unremitted foreign income is
below the 2,000 limit.
This applies only for the purposes of deciding whether unremitted foreign
income is below the 2,000 limit.
Foreign gains are always calculated in pounds sterling using the rates of
exchange prevailing at the time when the gain is calculated and when allowable
expenditure was incurred.

Example
Ifyouhad5,500foreignincomeand/orgainsinthetaxyearandyouremitted4,000tothe UK,yourunremittedforeignincomeand/orgainsinthetaxyearwouldbe1,500.

5.5.22,000ormoreunremittedforeignincomeand/orgainsinthe taxyear
Moredetailed informationisavailable intheResidence, Domicileand RemittancesManual at www.hmrc.gov.uk Werevisedourguidance onthecalculationof unremittedforeign incomeunder2,000 fromAugust2009. Ifdesired,thetreatment previouslyadvisedcan beappliedfor200809 only.Seechapter1of theResidence,Domicile andRemittancesManual formoreinformation aboutexchangerates. Youcanfinddetailsof exchangeratesat www.hmrc.gov.uk

Ifyourunremittedforeignincomeand/orgainsarisingoraccruingina taxyearare2,000ormore,youwillhavetomakeaclaimifyouwantthe remittancebasistoapplytoyouotherwiseyouwillbeliabletoUKtaxonthe arisingbasis. Ifyoudoclaimtheremittancebasisthen,inmostcases,inanytaxyearyou claim,youwillloseyourentitlementtoUKpersonalallowancesandreliefsfor IncomeTaxandtotheAnnualExemptAmountforCapitalGainsTax.Butyou mightnotloseyourentitlementtoUKpersonaltaxallowancesandreliefs,if youaredualresidentthatisresidentintheUKandalsoresidentincertain othercountriessee6.5. DependingonhowlongyouhavebeenresidentintheUK,youmightalsohave topaythe30,000RBC. Insomecasesyoumayfindthatthelossofyourpersonalallowancesand AnnualExemptAmountandpaymentoftheRBCwhereappropriate,would outweighanysavingsintaxonyourunremittedincomeorgainssoyoumay prefertobetaxedonthearisingbasis.Thatdecisionisyoursandwecannot giveyouadviceonwhatyoushoulddo.Youmightwanttogetadvicefroma professionaltaxadviser.
Example
Ifyouhad80,000foreignincomeand/orgainsinthetaxyearandyouremitted70,000tothe UK,yourunremittedforeignincomeand/orgainsforthetaxyearwouldbe10,000.

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5.6Howtomakeaclaimfortheremittancebasis
Ifyoudonotcurrently receiveaSelfAssessment taxreturnandwantto claimtheremittance basisyouwillneedtoask usforareturnandfor anysupplementary pagesyourequire. Youshouldaskany taxofficeoranyHMRC helplinetosendthe formstoyou.Youcanfind detailsofthehelplinesin ThePhoneBook orat www.hmrc.gov.uk

Ifyoudecidetomakeaclaimtobetaxedontheremittancebasisyoumust completeaSelfAssessmenttaxreturn,includingtheSA109Residenceand remittancebasisetc.supplementarypages.IfyouarenotdomiciledintheUK andareusingtheremittancebasisforforeigngains,youmightalsoneedthe SA108CapitalGainssupplementarypages. TheresidencesupplementarypagesoftheSelfAssessmenttaxreturncontain questionscoveringthestatusconditionsformakingaclaimfortheremittance basisandletsyoumakeadeclarationwhichcovers: residencestatus ordinaryresidencestatus domicilestatus makingyourclaimfortheremittancebasis caseswheretheindividualisunder18yearsofageat5April nominationsofforeignincomeand/orgainswhicharerequiredforyour claimtotheremittancebasistobevalid. Ifyouareusingtheremittancebasisbuthavelessthan2,000unremitted foreignincomeand/orcapitalgainsyouwillneedtocompletethesepagesif youareaSelfAssessmenttaxpayerforanyotherreason.

Overseaslosseselection
Aslossesonoverseas assetsarerelevantto chargeablegains,any claimtooffsetlossesis madeontheSA108 CapitalGains supplementarypages ofaSelfAssessment taxreturn.Youcan maketheelectioninthe whitespaceprovidedon theform.

IfyouarenotdomiciledintheUKandwishtooffsetanyoverseaslosses(from thedisposalofoverseasassets)againstyourchargeablegainsyoumust makean electiontodoso.Onceanelectionhasbeenmade,foreignlossesmaybeset againstUKgainsaswellasagainstforeigngains,subjecttospecialordering rules. YoucanonlydothisifyouareresidentbutnotdomiciledintheUKandthe electionmustbemadeforthefirstyearforwhichyouclaimtheremittance basis from200809onwards,whetherornotyouhavechargeablegainsor overseaslossesinthatyear. Oncemade,theelectioncannotberevoked.Ifyouchoosenottomakean electionyourforeignlossesfortheyearandforallfutureyears(inwhichyou remainnotdomiciledintheUK)willnotbeallowablelosses. FormoreinformationonforeignlossesseetheHMRCCapitalGainsTax Manual.Orconsultaprofessionaladviser.

Youcanfindthe CapitalGainsTaxManual atwww.hmrc.gov.uk

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ExceptionstomakingaSelfAssessmenttaxreturnclaimforthe remittancebasis
Normallyifyouwanttoclaimtheremittancebasis,youhavetocompletea SelfAssessmenttaxreturn.Therearetwoexceptionstothiswhichyouwill needtothinkabout. Whenyourunremittedforeignincomeand/orgainsarelessthan2,000 see5.5.1. WhenyouhavebeenresidentintheUKforfewerthansevenoftheprevious ninetaxyearsorareagedunder18andyou: havenoforeignincomeorgainsandnoUKincomeorgainsinthetaxyear (excepttaxedUKinvestmentincomeoflessthan100),and makenotaxableremittancesofforeignincomeand/orgainsinthetaxyear. Ifeitherofthesecasesapplies,youwillnotloseyourentitlementtoUK personalallowances,reliefstoIncomeTaxortotheAnnualExemptAmount forcapitalgains.YoumighthavetocompleteaSelfAssessmenttaxreturnfora reasonotherthantoclaimtheremittancebasis.Youmustcompleteanyreturn you receive from us.

5.7TheRemittanceBasisCharge(RBC)
Youarea'longterm' residentintheUKif youhavebeenresident hereinsevenormore ofthepreviousnineUK taxyears. Whenyoucountthe numberofyearsyou havebeenresidentin theUKforthispurpose, youmustincludealltax yearseventhosebefore 6April2008andthose whenyouwereunder 18yearsold. Youmustalsoinclude anyyearsinwhichyou wereresidentintheUK andentitledto'splityear treatment'foreither IncomeTaxorCapital GainsTaxpurposesand anyyearsinwhichyou wereresidentbut'treaty nonresident'. Tofindoutmoreonthis subjectseethe Residence,Domicileand RemittancesManual. Nominationsofforeign incomeand/orgains whenpayingtheRBCcan becomplex.Thenotesto helpyoucompleteyour SelfAssessmenttax returnwillhelpyou. Moredetailed informationon nominatingforeign incomeand/orgainsis availableinthe Residence,Domicileand RemittancesManual at

Ifyoudecidetoclaimtheremittancebasisandhavebeenalongtermresident intheUK,youmayhavetopaytheRBC. TheRBCisanannualtaxchargeof30,000.Itistaxonapartoftheforeign incomeand/orgainswhichyouleaveoutsidetheUKandispayableinaddition toanyUKtaxthatyouhavetopayoneitherUKincomeand/orgainsor foreignincomeand/orgainsremittedtotheUK. YoumustpaytheRBCif,inataxyear,youhave2,000ormorefrom overseasincomeand/orgainsarisingoraccruingwhichyouhavenotremitted totheUKand: youmakeaclaimtousetheremittancebasis youareaged18oroverattheendofthetaxyear youarea'longterm'residentoftheUK. TherulesontheRBCarecomplicatedandifyouthinkthatyouneedtopay theRBCyoushouldseetheResidence,DomicileandRemittancesManual or consultaprofessionaladviser.
ThisexamplewillhelpyoutoseewhentheRBCisdue.
Marthais42yearsoldandresidentintheUKin200809.Herunremittedforeignincome and/orgainsforthatyearare250,000.Martha'sresidencestatusfortheprecedingyearswas asfollows: 19992000 NotUKresident 200001 NotUKresident 200102 UKresident 200203 UKresident 200304 UKresident 200405 UKresident 200506 UKresident 200607 UKresident 200708 UKresident So,inadditiontobeingresidentin200809whensheconsidersmakingaclaimforthe remittancebasis,MarthahasbeenresidentintheUKforsevenofthelastninetaxyears.She willhavetopaytheRBCifshedecidestoclaimtheremittancebasisin200809.

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TheRBCwillbedueifitisappropriatetoyourcircumstancesasdeclaredona SelfAssessmenttaxreturnwhenyouclaimtheremittancebasis.Thecharge willbeIncomeTax,CapitalGainsTaxoracombinationofthetwo.Aspartof yourclaimfortheremittancebasisyouwillbeaskedtonominatehowmuchof yourforeignincomeand/orhowmuchofyourforeigngainsthe30,000tax chargeisfor.

Do I need to pay the Remittance Basis Charge (RBC)?

Start

Are you resident in the UK in the current tax year? No

Yes

Are you ordinarily resident in the UK?

Yes

Are you domiciled in the UK?

Yes

No

No

Youarenotentitled toclaimthe remittancebasis. TheRBCisnot relevanttoyou.

Youdonothaveto paytheRBC becauseyouarenot taxableonthe remittancebasis.

You are entitled to claim the remittance basis.

Continue

Youdonothaveto paytheRBC becauseyouarenot taxableonthe remittancebasis. Youmayneedto completea SelfAssessment taxreturn.

No

Do you want to use the remittance basis in the current tax year? Yes Yes Do you have 2,000 or more of unremitted foreign income and/or gains in the current tax year?
n Co

No

tin

ue

You will lose entitlement to personal tax allowances and the Annual Exempt Amount for capital gains. Youwillneedto makeaclaimfor theremittancebasis bycompletinga SelfAssessment tax return.

Youdonothaveto paytheRBC. You willpaytaxonany incomeorgainsyou remit to the UK. (Youmayneedto completeaSelf Assessmenttax returntodothis.)

No

Willyoube18or overattheendof thecurrenttaxyear? Yes

No

Were you resident in the UK for at least seven of the nine tax years before the current one?

Yes

You must pay the RBC. You must submit a Self Assessment tax return. You need to account for tax on any income and/or gains remitted to the UK.

Note: The flowchart is a broad guide to help you decide if you need to pay the Remittance Basis Charge. Youhaveachoiceeachyearwhethertoclaimtheremittancebasis.If,inaparticularyear,itwouldbe morebeneficialforyoutopaytaxonyourworldwideincomeandgainsthantopaytheRBC,youmay choosenottoclaimtheremittancebasis.

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5.8PayingtheRBC
IfyoupaytheRBCusinguntaxedforeignincomeand/orgainsfromoutsidethe UK,thepaymentmightberegardedasaremittanceandchargedtoUKtax.To avoidthishappening,ifyoudopaytheRBCfromoutsidetheUK,thepayment shouldbemadedirecttoHMRCandpaidby: acheque(drawnonaforeignbankaccount),or
anelectronictransferoffunds.
YoumightneedtodemonstratethatthepaymentwasmadedirecttoHMRC
andyoushouldkeepsufficientrecordstosupportthis,suchasacopyofthe chequedrawnontheforeignbankaccount. IftheRBCislaterrepaidtoyoubyHMRC,itwillberegardedasaremittance whentherepaymentismadeandwillbesubjecttoUKtaxatthatpoint.

5.9Whatisaremittance?
Moredetailed informationonwhat constitutesaremittance andthemeaningof remittanceisavailable intheResidence, Domicileand RemittancesManual at www.hmrc.gov.uk

Aremittanceisanymoneyorotherpropertywhichis,orwhichderivesfrom, youroffshoreincomeandgainswhicharebrought,eitherdirectlyorindirectly, intotheUKforyourbenefitorforthebenefitofanyotherrelevantperson. Arelevantpersonincludes: yourspouseorcivilpartner acohabitee,thatisapersonwithwhomyouliveasaspouseorcivilpartner yourminorchildrenorminorgrandchildrenwhoareunder18yearsofage yourspousesorcivilpartnersorcohabiteeschildrenorgrandchildrenwho areunder18yearsofage trusteeswhenyouare,oranotherrelevantpersonis,abeneficiaryofthetrust closecompanieswhenyouare,oranotherrelevantpersonisaparticipantin theclosecompanyforexampleasshareholders acompanywhichisa51%subsidiaryofaclosecompanyinwhichyouare, oranotherrelevantpersonis,aparticipant.(Thisappliesfrom 22April2009.) ThereisalsoaremittancewhenaserviceprovidedintheUKtoyouorany otherrelevantpersonispaidforoutsidetheUKwithyourforeignincome and/orgains. Moneyorpropertydoesnothavetobephysicallyimportedfromoverseasfora remittancetooccur.ItmightbereceivedintheUKfromanotherUKresident, inreturnformoneyorassetsrepresentingincomeand/orgainsbeing transferredtohimorheroverseas.Theprecisemethodofremittancemakes nodifference.Aremittancemaybemadeviaacommerciallyrecognisedform ofmoneysuchascash,notes,cheques,promissorynotes,billsofexchangeor financialcredit. TherearealsorulesrelatingtodebtswhicharebroughtintotheUKorareused toprovidegoodsandservicesintheUKandrulesrelatingtogiftsofforeign incomeand/orgainslaterremittedtotheUKbytherecipientwhenyou,or anotherrelevantperson,benefit.

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Exemptions
Moredetailed informationonthese exemptionsisavailable intheResidence, Domicileand RemittancesManual at www.hmrc.gov.uk

Incertaincircumstances,someserviceswhicharepaidfor,orpropertywhich waspurchasedoutofyourrelevantforeignincome,foreignemployment incomeorforeignchargeablegainscanbebroughttotheUKwithoutbeing chargeabletoUKtax. Theseexemptionsinclude: certainitemsofclothing,footwear,jewellerythatarebroughttotheUKfor yourpersonaluse.IfyouselltheitemsintheUKtheywillnolongerqualify fortheexemptionandwillbearemittance. worksofartandsimilaritemswhichyoubringtotheUKforpublicdisplay orrepair.AlsoanysuchitemsthatareonlyintheUKtemporarily certainitemswithanotionalvalueoflessthan1,000.

5.10Mixedfunds
Youcanfindmore detailedinformationon mixedfundsinthe Residence,Domicileand RemittancesManual at www.hmrc.gov.uk

Amixedfundisanoverseasfundofmoneyand/orotherpropertywhich contains,orconsistsof: morethanonetypeofincomeorgains,or incomeorgainsfrommorethanonetaxyear. Atypicalexampleisabankaccountintowhichdifferenttypesofincome,such asbankinterest,dividendsandearnings,orgainsarepaid.Anotherexampleof amixedfundisanassetwhichhasbeenpurchasedusingamixtureofincome


andcapitalmonies.
Youdonot haveamixedfundifyouhaveaseparateaccountforeachdifferent
formofincomefromeachtaxyear.
Ifyouusetheremittancebasisandyoumakearemittancefromamixedfund,
therearestrictrulesthatmustbeappliedtodecidetheorderinwhichamounts
ofincomeandchargeablegainswithinthemixedfundareremittedtotheUK.
Theorderinwhichremittancesfromamixedfundwillberegardedas
remittedis:
1 employmentincome(otherthanoverseasemploymentincome)
2 foreignincomewhichhasnotbeentaxedinanothercountry
3 foreignchargeablegainswhichhavenotbeentaxedinanothercountry
4 foreignincomewhichhasbeentaxedinanothercountry
5 foreignchargeablegainswhichhavebeentaxedinanothercountry.
Theorderingstartswithincomeandgainsandcapitalfromthelatestyearfirst,
andthenfromeachpreviousyearinturn.
Thisisacomplexareaandismentionedhereforyourinformation.Ifyouhave
remittedmoneyfromamixedfund,youshouldeitherrefertotheResidence,
DomicileandRemittancesManual forfurtherguidanceorspeaktoa
professionaltaxadviser.
Note:Incertainspecifiedcircumstances,employeeswhoareresidentbutnot ordinarilyresident intheUKandwhoperformthedutiesofanofficeor employmentbothinsideandoutsidetheUKdonothavetoapplythemixed fundruleinrespectoftransfersfromaparticularaccount.Ifyouthinkthatthis appliestoyou,youwillneedtoreadStatementofPracticeSP1/09Employees residentbutnotordinarilyresidentintheUK whichisavailableat www.hmrc.gov.uk

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5.11Temporarynonresidentsandtheremittancebasis
IfyouhavebeenresidentintheUK,gotoliveabroadandthenreturntothe
UKatalaterdatewhichislessthanfivefulltaxyearssinceyourdateof
departurefromtheUK,youwillhavebeentemporarilynonresidentintheUK.
Itispossiblethatany'relevantforeignincome'(RFI)whichyoubroughttothe
UKduringthetimeyouwerenotresidentintheUK,willbechargeabletoUK
taxintheyearyoubecomeresidentagainintheUK.
ThisrulewillapplyifyouwereresidentintheUKforatleastfourofthelast
seventaxyearsbeforeyoulefttheUK.
Relevantforeignincome(RFI)isanyforeignincomewhicharisesfroma
sourceoutsidetheUKandisnotfromyouremployment.Itincludes:
dividendsfromforeigncompanies profitsofapropertybusiness(rentalincome) theprofitsofatrade,professionorvocationwhichiscarriedoutwholly outsidetheUK pensionsandannuities interest royalties.
Example
YoureturntotheUKduringthetaxyear201112afteraperiodofresidenceabroad.
YouoriginallylefttheUKtobecomeresidentabroadon2September2006andsoyour
'yearofdeparture'was200607.YouhadbeenresidentintheUKforthesevenyearsbefore
yourdepartureandclaimedtheremittancebasisinthoseyears.
WhileyouwereresidentabroadyouremittedtotheUKthefollowingRFI:
15,000RFIfrom200304 RBclaimed remittedin200809 18,000RFIfrom200405 RBclaimed remittedin200809 18,000RFIfrom200506 RBclaimed remittedin200910 20,000RFIfrom200607 RBclaimed remittedin201011 Total 71,000 AsyouwerenotresidentintheUK,thisincomewasnottaxedwhenremittedhere. OnyourreturntotheUKin201112,youwillhavebeentemporarilynonresidentbecause therehavebeenfewerthanfivefulltaxyearsbetweenyouryearofdepartureandyour yearofreturntotheUK.YouwillbeliabletoUKtaxontheseearlierremittanceswhen youweretemporarilynonresident.TheywillbechargeabletoUKtaxinthetaxyearof yourreturn(201112). Note:Iftheyearofreturnhadbeen201213thetemporarynonresidentprovisions wouldnotapply.

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6 UKpersonaltaxallowances
6.1WhatareUKtaxallowances?
Youcanfinddetailsof currentandprevious yearstaxallowancesand ratesoftaxat www.hmrc.gov.uk orby phoningthehelpline. Youwillfindusin ThePhoneBook under HMRevenue&Customs. TofindoutwhatisaUK taxyearsee12.26.

AlmostallpeoplewhoareresidentintheUKareentitledtoanIncomeTax PersonalAllowance.Thisistheamountofincomeyoucanreceiveeachtax yearwithouthavingtopaytaxonit.Dependingonyourcircumstances,you maybeabletoclaimotherallowancessuchasBlindPersonsAllowanceorone oftheagerelatedlevelsofPersonalAllowance.

6.2WhencantyouclaimUKtaxallowances?
Fortaxyearsfrom6April2008,ifyouareresidentintheUKand: notdomiciled(seepart4)and/ornotordinaryresident(seepart3) intheUK,and have2,000ormoreinunremittedforeignincomeand/orgains,and
claimtheremittancebasis(seepart5)
then,inmostcases,youwillnot beentitledtoUKpersonaltaxallowances.In
thiscase,legislationremovesyourentitlementtoUKallowancesandreliefs
underdomesticlaw.Theonlyexceptiontothisaffectssomepeoplewhoare
dualresidentsthatisresidentintheUKandalsoresidentinanothercountry
underthatcountrysrules(seepart9).Thisexceptiondoesnotaffectalldual
residents;onlythosewhoqualifyforallowancesundercertainDoubleTaxation
Agreements(see6.5).
Theallowancesyouwillnotbeentitledtowhenyoumakeaclaimtousethe
remittancebasisforataxyearinclude:
alllevelsofthePersonalAllowance
BlindPersonsAllowance
taxreductionsformarriedcouplesandcivilpartners.
Youwillalsolosetaxreliefsforcertainpaymentsforlifeassurancepremiums
andtheAnnualExemptAmount(AEA)whichisanallowanceyousetagainst
anycapitalgainsyoumakeduringataxyearwhendisposingofassets.

Ifyouaretaxedonthe remittancebasisand havelessthan2,000 inunremittedforeign incomeand/orgains, youcanstillclaim personalallowances.

6.3HowdoyoureceiveUKtaxallowances?
IfyoualreadypayUKtaxthroughyourjoborpension,orifyoucompletea SelfAssessmenttaxreturn,youshouldreceiveaPersonalAllowanceifyouare entitledtoone.IfyouareanemployeeintheUK,youwillhavetaxdeductedat sourcefromyourwagesorsalaryunderthePayAsYouEarn(PAYE)system. Youremployerwilldeducttaxonthebasisofcodenumberswhichwesend themforeachemployee.Thecodewesendforyoushouldtakeintoaccount thetaxallowancesandreliefsyouareentitledto. IfyouneedtoclaimUKtaxallowances,youmustdosonolaterthan 31January,fiveyearsaftertheendofthetaxyeartowhichtheclaimfor allowancesrelates.From1April2010thetimelimitchangestofouryears fromtheendoftheyearofassessment.Forexample,ifyouareclaimingforthe taxyear201011(6April2010to5April2011),youhaveuntil5April2015 toclaim.

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6.4WhatshouldyoudoifyouhaveUKtaxallowancesandusethe remittancebasis?
From6April2008onwards,ifyouhaveclaimedtheremittancebasis(see part5)andyourunremittedincomeand/orgainsis2,000ormoreyouwill not beentitledtotheallowanceslistedinparagraph6.2. Ifyoudecideduringataxyearthatyouaregoingtousetheremittancebasis andyouarestillreceivingpersonalallowancesthroughthePAYEsystem,you maynotbepayingenoughUKtax.Ifyouletusknow,wecanarrangetoadjust yourPAYEcodesothatyouarenotleftwithataxbillattheendoftheyear becauseyouhavereceivedpersonalallowanceswhichwerenotduebecause youwereusingtheremittancebasis.Otherwisewewillaskyoutopaythe additionaltaxthroughtheSelfAssessmentsystem. IfyouwantustoadjustyourPAYEcodeyoushouldcontacttheofficewhich dealswithyourPAYEandaskforataxcodetobesentwhichdoesnotgive reliefforpersonalallowances.Thiswillreducetheamountoftaxyoumay haveunderpaidattheendofthetaxyear.Youremployercantdothisforyou asyourtaxaffairsareconfidentialbetweenyouandHMRC.Untiltheyreceive anewtaxcodefromus,youremployerwillcontinuetodeducttaxfromyou basedonthecodewesentbeforeyoutoldusyouwereclaimingthe remittancebasis.

6.5AreyouentitledtoUKpersonaltaxallowanceswhenusingthe remittancebasis?
Youcanfindmore informationaboutDouble TaxationAgreementsand dualresidenceinpart9. Youcanfindmore informationaboutthe remittancebasisin part5. Countrieswherea DTAwiththeUK entitlesyoutoUK personaltaxallowances whenclaimingthe remittancebasis: Austria Belgium Burma(Myanmar) Fiji Germany Greece Ireland Kenya Luxembourg Mauritius Namibia Netherlands Portugal Swaziland Sweden Switzerland Zambia

SomepeoplewhoclaimuseoftheremittancebasisarestillentitledtoUK personaltaxallowances.IfyouareresidentintheUKand,atthesametimeare residentinoneofthecountriesshown(thatisyouaredualresident)youwill beabletoreceiveUKpersonaltaxallowancesinanyyearthatyouclaimthe remittancebasis. TheDoubleTaxationAgreements(DTAs)betweentheUKandthecountries listedontheleftmakespecificprovisionfortheresidentsofthosecountriesto begivenentitlementtoUKpersonaltaxallowances.Thisspecificprovision doesnotappearinotherDTAsandonlythosepeoplewhoaredualresidentin theUKandoneofthecountrieslistedhereareentitledtoUKpersonaltax allowancesinataxyearwhentheremittancebasisisclaimed. AlthoughtheseDTAsallowyoutoclaimtheremittancebasisandstillreceive UKpersonaltaxallowances,youwillneedtoconsidercarefullywhether,in yourparticularcase,itactuallymakessensetodoso.ThetermsoftheDTA mightmeanthatthereis,infact,nobenefitinclaimingtheremittancebasis asthenonUKcountrymaytaxanyforeignincomeorgainsnotremittedto theUK.

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6.6AllowancesfornonUKresidents
Ifyouarenotresidentin theUKandyouwishto claimUKtaxallowances youshouldcontactyour taxoffice.

EvenifyouarenotresidentintheUK,youmaybeabletoclaimUKpersonal taxallowancesifyouare: aCommonwealthcitizen* acitizenofastatewithintheEuropeanEconomicArea(EEA)(thisincludesa Britishcitizen),thatisacitizenofaMemberStateoftheEuropeanUnion, Iceland,LiechtensteinorNorway acurrentoraformeremployeeoftheBritishCrown(includinga civilservant,memberofthearmedforcesandsoon.) aUKmissionarysocietyemployee acivilservantinaterritoryundertheprotectionoftheBritishCrown aresidentoftheIsleofManortheChannelIslands aformerresidentoftheUKwholivesabroadforthesakeofyourownhealth orthehealthofamemberofyourfamilywholiveswithyou awidow,widowerorthesurvivingcivilpartnerofanemployeeofthe BritishCrown aNationaland/orresidentofacountrywithwhichtheUKhasaDouble TaxationAgreementwhichallowssuchaclaim. *Thiscategoryappliesonlyuntil5April2010.From6April2010,youdonot qualifyforUKpersonaltaxallowancessolelybyvirtueofbeinga Commonwealthcitizen.But,youmaystillqualifyfortheseallowancesunder otherprovisionsorthrougharelevantdoubletaxationtreaty.

6.7AllowanceswhencomingtoorleavingtheUK
Youcanfindmore informationinpart7 ComingtotheUK and part8Departingfrom theUK.

IfyoubecomeorifyouceasetoberesidentintheUKduringataxyear,you willstillbeabletoclaimfullallowancesandreliefsintheyearofyourarrival ordeparture.Thiswillbesubjecttoanyclaimthatyouhavemadetothe remittancebasisoftaxationasoutlinedearlierinthispartoftheguidance.

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7 ComingtotheUK
Thisinformationisto helpyouunderstand yourtaxpositionwhen youfirstcometotheUK. Youcanfindother, generalinformation, onthingsyoumight needtodowhenyou firstcometotheUKat www.hmrc.gov.uk/ migrantworkers/

Ifyoucometoliveherepermanentlyortoworkhereforanextendedperiod, orwithnoparticularenddate,youwillbecomeresidentintheUK.Butnot everyonewhocomestotheUKbecomesresidenthere.Forexample,thosewho areintheUKonholidayorforashortperiodofworkwillgenerallynot becomeresidentintheUK. Inmostcasesitwillbeclearwhetheryoubecomeresidentornot,but sometimesitneedscarefulthoughtaboutanumberoffactors.Theseinclude: whetheryouhavebeenresidentintheUKbefore howmanydaysyouspendhere thepatternofyourpresenceintheUKorabsencefromitoveraperiod ofyears whetheryourpurposeforbeingintheUKissettledortemporary
yourfamily,socialandworktiestotheUK
youraccommodationarrangements.
Thefollowingsectionswillhelpyoutothinkaboutvariousfactorstodecideif,
andwhen,youhavebecomeresidentintheUK,andwhatthismeansforthe taxthatyoupay. IfyoubecomeUKresidentin aparticulartaxyear,bylawyouareresident for thewholeofthattaxyear.But,ifyoucometotheUKpartwaythrougha taxyear,theyearmaybyconcessionbesplit(ExtraStatutoryConcessionA11). ThismeansthattheUKIncomeTaxyoushouldpaybecauseyouareresident hereiscalculatedonthebasisoftheperiodyouarelivinghereratherthanthe wholeofthattaxyear.Thishastheeffectofsplittingthetaxyearintoresident andnotresidentperiodsforthepurposesofcalculatingthetaxdue.The followingguidance assumes that this splityeartreatmentapplies.

Decidingwhetheryou areresidentintheUKis notjustamatterof countingdays,unless youareherefor183or moredaysinataxyear, asthismakesyouUK residentforthattaxyear.

Formoreinformation aboutsplityeartreatment seeparagraph2.4.

7.1ResidenceandyourpurposeincomingtotheUK
ToworkoutwhatUKtaxyouwillhavetopay,youneedtoestablishwhether youareresidenthere.Todothisyoumustthinkaboutwhyyouhavecome here,andhowoftenandhowlongyouwillbehere. HaveyoucometotheUKtoliveherepermanentlyorindefinitely,ortolive orworkforthreeyearsormore?Ifyouhave,readparagraph7.2. HaveyoucometotheUKasastudentforacourseofstudyoreducation?If youhave,readparagraph7.3. HaveyoucometotheUKforlessthanthreeyears?Ifyouhave,read paragraphs7.4throughtotheendofthispartoftheguidance. HaveyoucometotheUKaspartofaseriesofvisits?Ifyouhave,read paragraphs7.4throughtotheendofthispartoftheguidance. Dependingonyourcircumstancesyoumayneedtofollowtwoormoreofthe abovereferences.

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7.2WhenyoucometotheUKpermanently,indefinitely,ortoliveor workforthreeyearsormore
Part2explainswhatwe meanbyresidentinthe UKwhilepart3explains whatwemeanby ordinarilyresidentinthe UK.Youshouldreadboth partsoftheguidance. Fromthedateyouarrive meansfromthe beginningofthetaxyear, butyouwillnotnormally bechargedtaxforthe perioduptoyourarrival intheUK.(Seethenote atthebeginningofthis partoftheguidance.) Youcanfindmore informationontheUK IncomeTaxliabilityof peoplewhohavebeen temporarilynonresident intheUKinpart5ofthis guidancesee5.11For informationoncapital gains,goto www.hmrc.gov.uk Allpeoplewhoworkin theUKandpayNICs needaNational Insurancenumber (NINO).Ifyoudonot alreadyhaveoneyou canapplybyphoneto theJobcentrePlus NationalInsurance numberallocation serviceon 08456000643.Lines areopenfrom8am to6pm,Monday toFriday. Youcangetmore informationat www.hmrc.gov.uk/ migrantworkers/ selfemployed.htm or byphoningour SelfemployedHelpline on08459154515. Foropeninghoursgoto www.hmrc.gov.uk or phoneus.

IfyourhomehasbeenabroadandyouhavecometotheUKtolivehere permanentlyorindefinitely,youwillberesidentandordinarilyresidentfrom thedateyouarrive. Youwillalsoberesidentandordinarilyresidentfromthedateyouarriveifyou havecometotheUKtoremainhereforthreeyearsormore.Thisisbecause youarenotsimplyvisitingbuthavesettledintheUKforthetimebeing. IfyouhavepreviouslybeenresidentintheUKandarereturningafteraperiod abroad,youwillneedtothinkaboutwhetherornotyourabsencefromtheUK wasaperiodofnonresidence.Youmaynothavebeenentitledtothesplityear treatment.Ifyouwere notresidentyoumayhavebeentemporarilynot residentandthismightaffectyourliabilitytoUKtaxwhenyoubecome residentintheUKagain. Whetherornotyouhavelivedherebefore,ifyouhavecometotheUKtolive orworkpermanently,indefinitely,orforthreeyearsormore,youshouldtellus immediatelysothatyoucanmakesurethatyouarepayingthecorrectamount of tax as soon as possible. If you work for an employer in the UK, they will give you the forms you need to complete for us and will deduct tax from your earnings on our behalf under PAYE see part 6. The forms might include form P46. If you have been seconded to work in the UK while employed by a foreign employer, they should give you the form P46 (Expat) to complete. We will send you any other forms that you need. If you are going to work for yourself that is, as a selfemployed person you can find out what you need to do at www.hmrc.gov.uk or you can phone our Selfemployed Helpline. The helpline will be able to give you the advice you need to make sure that you pay the right amount of UK tax at the right time. If you have come to the UK to live (permanently or indefinitely or for three years or more) but do not intend to work here, you must tell us if you have any taxable income and/or gains. Paragraphs 7.4, 7.5 and 7.6 explain what you need to think about if you have come to the UK and will not be staying here for three years or more, or permanently or indefinitely.

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Part2explainswhatwe meanbyresidentinthe UKwhilepart3explains whatwemeanby ordinarilyresidentinthe UK.Youshouldreadboth partsoftheguidance. Rememberthatifyouare intheUKfor183daysor moreduringataxyear youareresidenthere. Ifyouareaninternational studentandhavecometo theUKtostudyona studentvisa,youdonot havetotellusthatyou arehereunlessyouthink thatyoumighthaveto payUKtax. Ifyouareaninternational studentandhavea studentvisayouareable toworkwhileintheUK buttherearerulesabout thetypeofworkyoucan do.Tofindoutmorego totheUKBorderAgency websiteat www.ukba.homeoffice. gov.uk Youcanfindmore informationaboutDouble TaxationAgreementsat paragraph12.6andpart 9ofthisguidance. Part2explainswhatwe meanbyresidentinthe UKwhilepart3explains whatwemeanby ordinarilyresidentinthe UK.Youshouldreadboth partsoftheguidance. Rememberthatifyouare intheUKfor183daysor moreduringataxyear youareresidenthere. Youcanfindoutwhat countsasadayspentin theUKforthispurposein paragraph2.2.1. Youmaybecomeresident formanyreasonsduring yourvisit(s).Seepart2for whatwemeanbyresident. Youcanfindouthowto contactusinpart13.

7.3WhenyoucometotheUKasastudent
IfyourhomehasbeenabroadandyouhavecometotheUKforlessthan twoyearsforaperiodofstudyoreducation,youmightnotberesidentinthe UK(seeparagraphs7.4and7.5).IfyouhavecometotheUKformorethan twoyearsbutlessthanfouryearsforstudyoreducation,youwillberesident intheUKwhileyouarehere.Butyouwillnot usuallybeordinarilyresidentif: youdonotownorbuyaccommodationhere youdonotacquireaccommodationhereonaleaseofthreeyearsormore whenyouleavetheUKyoudonotplantoreturnhereregularlyforvisits whichaverage91daysormoreinataxyear(tocalculateyouraveragevisits totheUKseeparagraph7.6). If,whileyouarestudyingintheUK,yougetajobtohelpsupportyourself, youmighthavetopayUKtaxonyourearnings.Thisisbecauseyourearnings arefroma UKsourceandareliabletoUKtaxwhetherornotyouareresident in the UK. If you are going to work in the UK you will usually need a UK National Insurance number. You can find information about this and other details of working in the UK in paragraph 7.2. How much tax you have to pay will depend on the amount you earn during a tax year. You may be entitled to UK personal tax allowances which reduce the amount of any UK tax that you have to pay. This is explained in part 6. As a student from outside the UK, you should check if there is a Double Taxation Agreement (DTA) between the UK and your own country. Most DTAs make provision for the tax treatment of the money paid from abroad for course fees and your support while you are studying here. It is important that you check your position as this will affect what, if any, UK tax you need to pay on foreign income and/or gains that you bring into the UK.

7.4WhenyoucometotheUKtemporarily
IfyouaresimplyvisitingtheUK,thenyoumightnotberesident.Butyouare
notsimplyvisitingtheUKifyouhaveapurposeforbeingherewhichisnot
temporary.ThenatureandextentofyourconnectionstotheUKmayindicate
thatyourpurposeintheUKisnottemporary.
Ifyouareheretemporarilyreadparagraphs7.5and7.6.Youmayalsoneedto
readparagraph7.7.
IfyouremainintheUKforaperiodthatspanstwotaxyearsandareresident
inthesecondyearthenyouwillneedtothinkaboutwhetheryouwerealso
residentinthefirsttaxyear.Thiswilldependonallthefacts.
ItispossiblethatafteryoufirstcometotheUKyourcircumstanceschangeand
youaregoingtoliveherepermanentlyorindefinitely,oryouaregoingto
remainhereforthreeyearsormorefromthedateofyourarrival.Insucha
situation,youwillbecomeresidentandordinarilyresidentintheUKandyou
shouldreadparagraph7.7.Ifyourcircumstanceschangeandyoubecome
residentintheUK,youshouldtellusassoonaspossibletomakesurethatyou
are paying the correctamountoftax.

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7.5Shortterm,oneofforrepeatedvisitsresidenceand ordinaryresidence
ThissectionappliestoyouonlyifyouareintheUKtemporarily(see paragraph7.4).
Youcanfindoutwhat countsasadayspentin theUKforthispurpose inparagraph2.2.1.

IfyouaremakingaoneoffvisittotheUKandleavebeforeyouhavebeenhere for183daysinataxyearandyoudonotintendtoreturn,youwillnotusually beresidentorordinarilyresidentintheUK. But,ifyouaregoingtomakeanumberofseparatevisitstotheUKyouneedto thinkaboutwhetherthiswillmakeyouresidentand/orordinarilyresidenthere. Itdoesnotmatterwhetherthevisitsareforthesamepurposeordifferent purposes,orvaryinglengthsoftime.

Youcanfindouthowto calculatetheaverage numberofdaysyouvisit theUKinparagraph7.6.

Ifyouaremakinganumberofseparatevisits,part2explainsthatyouneedto lookatthepatternandregularityofyourvisits.Thelengthoftimerequiredto establishapatternwilldependonyourcircumstancesbutafterthreeyearsit willusuallybepossibletojudgethepatternthathasemerged. Youmaynotknowhowlongyouwillcontinuetovisitwhenyoufirstarrivein theUK.If,afterthreecompletetaxyears,apatternhasemergedthatthese visitstotalmorethan91daysonaverageandyourvisitscontinue,thenyou willbecomeresidentandordinarilyresidentintheUKfromthestartofthe nexttaxyear.

Youmaybecome residentformany reasonsduringyour visit(s).Refertopart2 forwhatwemeanby residentintheUK.Part 3explainswhatwemean byordinarilyresidentin theUK.

Buttherearesituationswhereyoumightbecomeresidentandordinarily residentintheUKbefore youhavebeenvisitingforfouryears,forexample: whereyouknow,whenyoustartvisitingtheUK,thatyourvisitsherewillbe foranaverageof91daysormoreforeachtaxyear.Inthesecases,youwill beresidentandordinarilyresidentfrom6Aprilofthetaxyearinwhichyou firststartmakingyourvisits. whenyourealiseafterstartingtovisittheUKregularlythatyourvisitsare goingtobeforanaverageof91daysormore.Inthesecasesyouwillbe resident and ordinarily resident from 6 Aprilofthattaxyear. when your circumstanceschange so that your purpose for being in the UK is no longer temporary. It is possible that after you first come to the UK to visit, or after you have made a number of visits here, your circumstances change so that you are going to live here permanently or indefinitely, or are going to remain here for three years or more from the date of your first arrival. If this is the case, you will become resident and ordinarily resident in the UK and should read paragraph 7.7. If your circumstances change and you become resident in the UK you should tell us as soon as possible so that you can make sure that you are paying the correct amount of tax.

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7.6HowtocalculateyouraveragedaysintheUK
Residenceisnotpurelya matterofdaycounting. Thenumberofdays spentintheUKisone factorwhichneedstobe consideredalongside others.Part2ofthis guidanceexplainswhat wemeanbyresident intheUKwhilepart3 explainswhatwemean byordinarilyresident intheUK.Youshould readbothpartsof thisguidance. Youcanfindoutwhat countsasadayspentin theUKforthis calculationinparagraph 2.2.1and2.3.

CalculatingyourannualaveragedaysintheUKisausefulindicationofthe extentofyourconnectiontotheUK.Itmayalsoindicateifwhenyouhave visitedtheUKfrequentlyyouhavebecomeresidenthere. IfyouneedtocalculateyourannualaveragedaysintheUK,youdoso likethis: TotaldaysintheUKx365=annualaveragedays Relevanttaxyears(indays) Theannualaverageiscalculatedoverthenumberofyearsyouhave beenvisitingtheUK,uptofouryearsafterwhichonlythelastfouryears areincludedintheaverage.(Butifthepatternofyourvisitsvaries substantiallyyearbyyear,itmightbeappropriatetolookattheperiodswith differentpatternsseparatelyandtocalculateaveragedaysintheUKforeach distinctperiod).
Example
Thisisforillustrativepurposesonlyandanycalculationyoumakewouldbebaseduponyour
owncircumstances thedaythatyou actuallystartedtovisittheUKandthedaysthatyou
havebeenhereintheperiod.
IfyouwereintheUKfor:
55daysinthetaxyear200809(365daysinthetaxyear)
49daysinthetaxyear200910(365daysinthetaxyear)
105daysinthetaxyear201011(365daysinthetaxyear)
57daysinthetaxyear201112(366daysinthetaxyear)
Theannualaverageofyourvisitswouldbe:
(55+49+105+57)(365+365+365+366)x365=66.45

Forfurtherinformation aboutpassengers travellingthroughthe UKsee2.3.

YoushouldcountadayasonespentintheUKifyouarehereatmidnightat theendoftheday.Donotincludedaysoftransit,ifyouarrivefromanother countryononedayandleavetheUKthenextdayanddonotengageinany activitiesunrelatedtoyourjourneywhileintheUK. Thisisthegeneralpractice,butitwillnotnecessarilybeappropriateinall cases.Ifyouspendverysignificantamountsoftheyeartravelling internationally,youshouldkeeparecordbothofthedaysyouwerepresentin theUKandofthosedayswhereyouarehereatmidnight.Bothwillbefactors whenlookingatthepatternandpurposeofyourvisits.

7.7IfyoucometotheUKformorethan183daysbutremainhere lessthanthreeyearsfromyourarrival
Youcanfindouthowto calculatetheaverage numberofdaysyouvisit theUKinparagraph7.6. Residenceisnotpurelya matterofdaycounting. Thenumberofdays spentintheUKis onefactorwhichneeds tobeconsidered alongsideothers.

Part2explainswhatwemeanbyresidentintheUKwhilepart3explains whatwemeanbyordinarilyresidentintheUK.Youshouldreadbothpartsof thisguidance. YouwillalwaysberesidentintheUKifyouareherefor183daysormorein thetaxyear. Asexplainedinparagraph7.5,ifyouareintheUKonaregularbasisitis possiblethatyouwillbecomeresidentandordinarilyresidentintheUKbefore youhavebeenvisitingforfouryears.

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7.7.1Residence
Youmaybecomeresidentforanyofthereasonsdescribedinpart2.
IfyouremainintheUKforaperiodthatspanstwotaxyearsandareresident
inthesecondyearthenyouwillneedtothinkaboutwhetheryouwerealso
residentinthefirsttaxyear.Thiswilldependonallthefacts.

Youcanfindoutwhat countsasadayspentin theUKforthispurpose inparagraph2.2.1. Fromthedateofyour arrivalmeansfromthe beginningofthetax year,butyouwillnot normallybechargedtax fortheperioduptoyour arrivalintheUK see thenoteatthe beginningofthispartof theguidance.

IfyouhavecometotheUKandwillberemaininghereforatleasttwoyears
butfornotmorethanthreeyears,youwillberesidentfromthedateofyour
arrival(evenifyouarehereforfewerthan183daysinthefirsttaxyear).This
doesnotnecessarilymeanthatyouwillalsobeordinarilyresident.

7.7.2Ordinaryresidence
YourordinaryresidencestatusmayaffectwhatUKtaxyouhavetopayand
thisstatusmaychangewhileyouremainintheUK.
Ordinaryresidenceisdifferentfromdomicileanditisimportantnottoconfuse
thetwoterms.(Domicileiscoveredinpart4).
Generally,youbecomeordinarilyresidentintheUKwhenitbecomesnormal
(ordinary)foryoutoberesidentintheUK.Sometimesitisclearthatyou
becomeordinarilyresidentassoonasyouarriveintheUK,butsometimes
ordinaryresidenceisestablishedonlyafteryouhavebeenhereforawhile.
IfyoucometotheUKforlessthanthreeyears,youmightnotbeordinarily
residentherebuttherearemanyfactorstoconsider.Youshouldreadpart3of
thisguidancewhichexplainswhatismeantbyordinarilyresidentintheUK.
IfyourcircumstanceschangeafteryoufirstarriveintheUK,itispossiblethat
yourordinaryresidencestatusmightchangeasaresult.

7.7.3Ordinaryresidencewhenyouarrive
IfyouhavecometotheUKforasettledpurpose,forexampletoliveorwork intheUKforthreeyearsormore,youwillbeordinarilyresidentfromwhen youfirstarrive. Ifyouownoracquireaccommodationonalongtermleaseofthreeyearsor moreintheyearyouarrivethisisanindicationthatyourpresenceinthe UKformspartoftheregularandhabitualmodeofyourlifeforthetime being.Suchamodeoflifemeansthatyouareordinarilyresidentfromwhen youarrive. Buttheownershipofaccommodationbyitself willnotmakeyouordinarily residentprovidedyoudisposeofitandleavetheUKwithinthreeyearsof yourarrival. YoucanstillbeordinarilyresidentintheUKevenifyouleavewithinthree years,forexampleifyourpurposeforbeingherewassettledwhenyoufirst camehere.

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7.7.4Ordinaryresidenceafterarrival
Youcanfindexamples ofasettledpurposein part3.

Ifyoudonothaveasettledpurposeonarrivalyoucanstillbecomeordinarily resident.Youwillbecomeordinarilyresidentwitheffectfromthestartofthe taxyearinwhich: youfirsthaveasettledpurpose youdecidetostayhereforthreeyearsormorefromthedateofyourarrival youremainedformorethanthreeyearsfromthedateofyourarrival. FactorsthatindicateyouhavemadeadecisiontostayintheUKformore thanthreeyearsincludeacquiringaleaseonaccommodationoraccepting anemploymentcontractlastingmorethanthreeyearsfromthedateof yourarrival. Asexplainedabove,ifyouhaveremainedformorethanthreeyearsfromthe dateofyourarrivalyouwillbeordinarilyresidentherefromthestartofthe taxyearinwhichthethirdanniversaryfalls.Whilethisappliestothemostof cases,therecouldbeexceptions,whereparticularfactsthatyouwouldneed tosupportwithevidencemightindicatethecontrary.Forexample,ifyou marginallyoverstayedathreeyearperiodandthenlefttheUK,perhaps becauseaprojectyouwereworkingonoverranorahousepurchasefell through,youmightstillbenotordinarilyresidentforthedurationofyourstay. (IfyoulaterreturntotheUKandbecomeresidentagain,withintwoyearsof havingleft,youareverylikelytobecomeordinarilyresidentonyourreturn.) InveryunusualcircumstancesyoumayberesidentintheUKforthreeyearsor morebutremainnotordinarilyresident.Ifthisisthecase,youwillneedto showthatyourresidenceintheUKisnotordinaryforyouandthatyouhave nosettledpurposehere.Thecircumstancesinwhichthiswouldapplyand whenyouwillbecomeordinarilyresidentwilldependonthefactsofeachcase. Youmaywishtotakeprofessionaladviceifyouthinkthisappliestoyou. IfyouareordinarilyresidentintheUK,leaveandreturnwithintwoyears,you willusuallybeordinarilyresidentfromthedateofyourreturn.

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7.8Supportingexamples
Theseexamplesassume forthesakeofclarity, thatyouhavenot previouslyspenttimein theUK.Ifthisisnotthe casethenyouwillneed tothinkaboutallthe facts,includingthe purposeforyour previousvisits,any emergingpatternsand yourtotalandaverage daycounts.

Theseareillustrativeexamplestosupporttheguidanceoutlinedin7.7.4.The examplesarenotexhaustiveordefinitivebutwillhelpyoutounderstandyour ordinaryresidencestatuswhenyouhavecometotheUK.Yourordinary residenceintheUKwillbebasedonyourindividualcircumstances.


7.8.1Example1OrdinaryresidencewhenyouhaveremainedintheUK forthreeyearsormore
WhenyouarrivedintheUKon6June2009,inthetaxyear200910,youdidnotthinkthat youwouldbestayinghereforthreeyearsormore.Sincethenyouhavenotboughtany accommodationhereorleasedanyaccommodationforthreeyearsormore.The accommodationyouhaveusedhasbeenonshorttermleases. On7June2012(taxyear201213)youarestillintheUK.Thisisthreeyearsandadaysince youfirstarrivedhere. YouwillbeordinarilyresidentintheUKfrom6April2012.Thisisbecauseyouhavenowbeen intheUKforalongenoughperiodoftimeforyourbeingheretobeconsideredordinaryfor you.6April2012isthestartofthetaxyear201213inwhichthethirdanniversaryofyour arrivalintheUKoccurred.

7.8.2Example2Ordinaryresidencewhenyourcircumstanceschangeand youremainintheUKforlongerthanoriginallyplanned
WhenyouarrivedintheUKon6June2009youcameonafixedtermappointmentforaperiod of18monthsanddidnotthinkthatyouwouldbestayinghereformorethanthreeyears.In October2010youacceptedatwoyearextensiontoyouremploymentcontract.Youare contractedtoremainintheUKuntiltheendof2012whichwillbemorethanthreeyearsfrom thedateyouarrivedhere. YouwillbeordinarilyresidentintheUKfrom6April2010.Thisisbecauseyouarenowgoingto beintheUKforalongerperiodthanyoufirstthoughtandtheperiodisnowlongenoughfor yourbeingheretobeconsideredordinaryforyou.6April2010isthestartofthetaxyearin whichyoumadethedecisiontoremainintheUKforlongerthanyouoriginallyplanned. IfyouhaddecidedinDecember2009 inthesametaxyearasyouarrivedhere,thatyouwould beremainingintheUKuntil2015youwouldbeordinarilyresidentfrom6June2009whichis thedateyouarrivedintheUK.Thisisbecause althoughyoudidnotthinkyouwouldbe stayingwhenyoufirstarrived youhavedecidedtostaywithinthesametaxyear.Theperiod forwhichyouarenowgoingtobehereislongenoughforyourpresenceintheUKtobe consideredordinaryforyou.

Specialtreatmentapplies topeoplewhentheyfirst arriveintheUKand whentheyleavetheUK see2.4.

7.8.3Example3Ordinaryresidencewhenyoubuyorlease accommodationforthreeyearsormore
WhenyouarrivedintheUKon6June2009youdidnotthinkthatyouwouldbestayinghere forthreeyearsormore.InMay2010youbuyahouseintheUKtolivein. YouwillbeordinarilyresidentintheUKfrom6April2010.Thisisbecausebuyingthehouse hereshowsthatyourbeingintheUKisnowordinaryforyou.6April2010isthestartofthe taxyearinwhichyouboughtthehouse. but Ifbuyingthehousewastheonlyreasonyouwereordinarilyresident,andyousoldthehouse andlefttheUKbefore6June2012,youwouldbeabletosaythatyouwerenotordinarily residentfortheperiodyouwerehere.Theperiodofownershipwassufficientlyshortnottobe classedasforasettledpurposeoflivingintheUK.

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8DepartingfromtheUK
IfyouemigratefromtheUKyouwillstopbeingresidenthere.Thiswould meanthatyouleave,setuphomeelsewhere,andsubstantiallycutyourtiesto theUK. Ifyouleaveforshorterperiods,foroccasionalresidenceabroad,orwithno settledpurposeabroad,itislikelythatyouwillremainresidentintheUK evenifyoubecomeresidentinanothercountryunderthatcountrysrules.

8.1LeavingtheUKpermanentlyorindefinitely
IfyouareleavingtheUKpermanentlyorindefinitely,eithertoworkorfor anotherreason,youmusttellusbycontactingyourtaxoffice.Wewillgiveyou formP85tocompletesothatyoucangetanytaxrefundyouareowed.We willalsotellyouifyouwillneedtocompleteaUKtaxreturnafteryouhave leftthecountry. LeavingtheUKpermanentlymeansthatyouareleavingthecountrytolive abroadandwillnotreturnheretolive.Leavingindefinitelymeansthatyou areleavingtoliveabroadforalongtime(atleastthreeyears)butyouthink thatyoumighteventuallyreturntolivehere,althoughyoudonotcurrently haveplanstodoso. TheactofleavingtheUKdoesnotnecessarilymakeyounotresidentandnot ordinarilyresident.YoumustalsomakeadefinitebreakfromtheUKandany remainingtiesyouhavewiththeUKmustbeconsistentwithnotbeingresident here.Ifyousaythatyouarenolongerresidentandordinarilyresidentinthe UK,wemightaskyoutogivesomeevidencetoshowthatyouhavelefttheUK permanentlyorindefinitelyandthattherehasbeenaclearchangeinthe patternofyourlife.Forexample,wewouldexpectyoutoshowthatwhenyou left the UK you had acquired accommodation abroad to live in as a permanent home. If you still have property in the UK which you can use after you leave, we might want you to explain how retaining that property is consistent with leaving the UK. You will not cease to be resident in the UK simply because you become resident elsewhere. You can become resident in another country and remain resident in the UK. If you are leaving the UK permanently or indefinitely you will become not resident and not ordinarily resident from the day after the day of your departure.

Youcanalsogetform P85atwww.hmrc.gov.uk Youcannotcompletethe formonlinebutyouare abletodownloadand printtheformwhichyou canthensendtoyour taxoffice. Youwillfindtheaddress ofyourtaxofficeand yourHMRCreference numberonany correspondenceyou havereceivedfromus, includingyourmost recentformP60and formP45. Ifyouareunsureyoucan contactyourlocalHMRC officewhowillbeableto helpyou.Youcanfind yourlocaltaxofficein ThePhoneBook orat www.hmrc.gov.uk Thetermsresidence andordinaryresidence areexplainedin parts2and3ofthis guidance.Youshould readbothparts.

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8.1.1Theyearyouleave
Althoughthenormalruleinlawisthatyouaretaxedasaresidentforthe wholeofthetaxyearinwhichyouareUKresident,thereisanExtraStatutory Concession(ESCA11)thatallowsthetaxyeartobesplit.Theeffectofthis concessionisthatyouhavetopayUKtaxasaresidentonlyforthepartofthe taxyearbeforeyoufinallyleave. ESCA11hasparticularconditions;itdoesnotapplyinallcases.Ifyouwere ordinarilyresidentintheUKbeforeyourdateofdepartureyouhavetostop beingordinarilyresidentheretobenefitfromtheconcession.Part3explains whatwemeanbyordinarilyresidentintheUK.ESCA11willneverapplyif yourdateofdepartureanddateofreturnfallinsuccessivetaxyears.Youwill alwaysneedtobenotresidentforatleastawholetaxyearforit toapply. AnExtraStatutoryConcessionwillnotbegiveninanycasewhereanattempt ismadetouseitfortaxavoidance.

Youcanfindoutwhatis ataxyearat12.26.

Youcanfindinformation onallESCsinthe followingHMRC guidance:Extra StatutoryConcessions andStatementsof Practiceat www.hmrc.gov.uk/ thelibrary/esc.htm

8.2LeavingtheUKforshorterperiodsoftime
YouwillstillbetreatedasresidentintheUKifanyperiodsoftimeyouspend outsidetheUKareforoccasionalresidenceabroadonly.Occasionalresidence meansyouhavenosettledpurposeforacontinuingabsencefromtheUK. Occasionaldoesnotmeanthatyourabsencemustbeisolatedorofshort duration.Aseriesofbusinesstripsabroadisanexampleofperiodsof occasionalresidenceabroad. IfyounormallyliveintheUKandgoabroadregularly,forexampleon extendedholidays,youwillcontinuetoberesidenthere.Thistypeofabsence doesnotstopyoubeingresidentandordinarilyresidentintheUK,becauseyou havenotmadeadefinitebreakfromtheUK.

8.2.1Evidenceofadefinitebreak
Forinformationabout dualresidencesee12.7.

IfyoudonotmakeadefinitebreakandcutyourUKtiesthenyouremain residentintheUK.YoucouldalsobedualresidentthatisresidentintheUK andanothercountry. YoumightnothaveevidenceofadefinitebreakfromtheUKforsometime afteryouleavetheUK.Inthissituationyouwillneedtoreviewyour residencestatuslatertoconfirmwhetheryouhavebecomenotresident,and whenthishappened. Forexample,ifyouhavetravelledinandoutoftheUKfairlyfrequently,the exacttimingoftheendofyourresidenceherecouldbedifficulttoestablish. Youshouldthereforekeepevidencerelatingtoyourlifestylebeforeandafter thedateonwhichyouthinkyouceasedtoberesident. Ifthecircumstancesofyourlifechangegradually,thenyouwillbecomenot residentonlywhenyouhavesufficientlyreducedyourtiestotheUKandare morethanoccasionallyresidentabroad. Theevidencethatyouwillbeabletoshowthatyouhavemadeadefinitebreak willdependontheextentofyourUKtiesinitially.Ifyouhadfewinitial connectionswiththeUKyouwillhavelessevidencetoshowthatyouhave madeadefinitebreak. Inthosecircumstancesstrongtiestoanothercountry,includingahomeand settledpurposeforyourpresencetherethroughoutacompletetaxyear, wouldbemoreofafactorindecidingifyouhavelefttheUKpermanently orindefinitely.
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8.3CompleteabsencefromtheUK
Residenceisconnectedtophysicalpresence.IfyouliveoutsidetheUKfora completetaxyearanddonotsetfootintheUKyouwillnotberesidentinthe UKforthattaxyear,unlessyourabsencefromtheUKisforthepurposeof occasionalresidenceabroadonly.Forexample,ifyourabsencewasfora oneoffyearlongholidayafterwhichyourresidenceintheUKresumedits previouspattern,youwouldremainUKresidentduringyourabsence. IfyoubecamenotresidentsimplybecauseofacompleteabsencefromtheUK, itisunlikelythatyourpresenceintheUKonyourreturnisforatemporary purposeonlyifanyofyourUKtiesremainedthroughoutyourperiodof absence.Youwouldmostlikelybecomeresidentagainonyourreturn. Evenwhenyouareabsentforawholetaxyearandsobecomenotresident, youmightremainordinarilyresidentintheUK.Youwillneedtoconsiderthe patternofyourresidenceoveranumberofyearsandthepurposeandpattern ofanyordinaryresidenceabroad.

8.4Specialrulesforcertainemployeesandoffices
Therearespecialrulesforsomeemployeeswhoworkabroadorholdcertain offices.Theseareexplainedinbriefbelowwithlinkstofurtherguidancewhere applicable.Somegroupsofemployeesaredealtwithinspecialisttaxoffices andwherethisisthecasetheofficeisshowninpart13ContactingHMRC. Wherenospecialistofficeisshownindividualsshouldcontacttheirown taxoffice.

Crownemployees
ACrownemployeeissomeonewhoholdsanofficeoremploymentunderthe CrownsuchasamemberoftheUKarmedforces,acivilservantoradiplomat. Itdoesnotincludeallpublicservantssuchasdoctorsandnurses,whowork fortheirlocalNHSTrust,orteacherswhoworkfortheLocalEducation Authority.Nordoesitincludeemployeesofgovernmentagenciesand nondepartmentalpublicbodies. Crownemployees are always taxed in the UK in full on their Crown employmentincomewhetherthedutiesoftheemploymentarecarriedout intheUKoroverseas.Asaresultresidenceisirrelevantinworkingouttheir taxliabilityontheirCrownemploymentincome.

UKmerchantnavyseafarers
SeafarersworkingonUKships,whousuallyliveintheUKwhentheyarenot atsea,areresidentintheUK.Butwhiletheyareworkingasseafarerswholly orpartlyoutsidetheUK,theymaybeentitledtotheSeafarersEarnings Deductionwhichcanreducethetaxtheyhavetopay.Youcanfindfulldetails atwww.hmrc.gov.uk/cnr/seafarerstax.htm

Certainoilandgasworkers
Whereanindividualworksintheoilorgasexploration/extractionindustry withintheUKsterritorialwaters,orotherdesignatedareas,theyaretaxedin fullintheUKonthoseearningsirrespectiveoftheirresidencestatus.Different rulescanapplyforthoseworkingoutsidethedesignatedareasorthose workingfornonUKemployers.Youcanfindmoreguidanceat www.hmrc.gov.uk/manuals/eimanual/EIM40208.htm
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Entertainersandsportspeople
Specialisttaxrulesfor entertainersand sportspeopleare administeredbythe ForeignEntertainersUnit (FEU).Youcanfindmore detailsabouttherulesat www.hmrc.gov.uk/feu/ feu.htm

EntertainersorsportspeoplewhoarenotresidentintheUKbutperformor competeintheUKarestilltaxableintheUKonanypaymentsreceivedin connectionwiththatUKwork.Normallythepersonpayingtheentertaineror sportspersonwillwithholdtaxfromthepayments.

Students
TheUKhasenteredintoDoubleTaxationAgreementswithmanycountries thatprovidespecialrulesforstudentswhocometotheUKtostudy,orgofrom theUKtostudyabroad.Undertheserulescertainincomeisnottaxableinthe countryofstudyifitisusedonlyforthemaintenanceandeducationofthe student.Youcanfindmoregeneralguidanceforstudentsat www.hmrc.gov.uk/students/

PeoplesecondedtoworkintheUKbytheiremployer
IfyouaresecondedtoworkintheUKbyyouremployer,andcontinueto undertakedutiesabroad,youshouldkeeprecordsofworkdoneintheUKand abroad,coveringboththenatureoftheworkanditsextent.Inrecording workingdays,partdaysareincludedforthesepurposes,notjustthosedays whereyouareintheUKatmidnight.

EmployeesoftheEuropeanUnion
IfanindividualwhoisordinarilyresidentintheUKgoesabroadtotakeup employmentintheEuropeanUnioninamembercountry,theywillremain ordinarilyresidentintheUKforthepurposeofUKIncomeTax,thoughnot forCapitalGainsTax.Iftheindividualremainsordinarilyresidenttheywill alsoremainresidentforanyyearinwhichtheyvisittheUK,nomatterhow shorttheirstay. SoifMrAdamswasresidentandordinarilyresidentintheUKandwentto LuxembourgtoworkfortheEuropeanUnionhewouldremainordinarily residentintheUKthroughoutandresidentforanytaxyearinwhichhevisits theUK.

AmemberoftheHouse ofLordsissomeonewho isentitledtoreceivea writofsummons.AnMP isapersonwhohasbeen electedtotheUK Parliamentandtaken theoathupontaking theirseat.

MembersoftheUKParliamentandHouseofLords
MembersoftheHouseofCommons(MPs)andHouseofLords(Peers)are resident,ordinarilyresidentanddomiciledintheUKforIncomeTax, InheritanceTaxandCapitalGainsTax.Thiswillapplytothewholeofeach taxyearinwhichapersonisamemberofeitherHouse,startingin201011. Thisappliesevenifthatpersonisamemberforonlypartofthetaxyearand regardlessofwhetherornottheyareonaleaveofabsence.Itdoesnotapplyto theLordsSpiritualorPeerswhoaredisqualifiedfromsittingandvotingasa resultofbecomingaMemberoftheEuropeanParliamentorajudge.

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8.5LeavingtheUKtoworkabroadasanemployee
Whatwemeanby fulltimeemployment: UKtaxlawdoesnotgivea definitionoffulltime employment.Thedecision onwhetherornotyouare employedabroadfulltime willdependonthe particularcircumstances ofyourcase. Ifyousaythatyouare workingabroadfulltime, wewouldexpectyouto beabletoshowthat youremployment: hasastandardpattern ofhourswhichcanbe comparedtoatypical UKworkingweek or ifyouremployment doesnothaveaformal structureorfixed numberofworking days,itcan,bylooking atthelocalconditions andpracticesofthe particularoccupation, becomparedtosimilar fulltimeemployment inthecountrywhere youareworking.

IfyouareleavingtheUKtoworkabroadfulltime,youwillonlybecome notresidentandnotordinarilyresidentfromthedayafterthedayofyour departure,aslongas: youareleavingtoworkabroadunderacontractofemploymentforat leastawholetaxyear youhaveactuallyphysicallylefttheUKtobeginyouremployment abroadandnot,forexample,tohaveaholidayuntilyoubeginyour employment youwillbeabsentfromtheUKforatleastawholetaxyear yourvisitstotheUKafteryouhavelefttobeginyouroverseas employmentwill totallessthan183daysinanytaxyear,and averagelessthan91daysataxyear.Thisaverageistakenoverthe
periodofabsenceuptoamaximumoffouryears.
TocalculateyourannualaveragevisitstotheUK:
TotaldaysvisitingUKx365=annualaveragevisits
Taxyearsyouhavevisited(indays)

Examples
Theseexamplesareforillustrativepurposesonlyandanycalculationyoumakewouldbe baseduponyourowncircumstances thedaythatyouactuallylefttheUKandthedays thatyouhavevisitedtheUKintheperiod.

Example1
IfyouweretoleavetheUKon20May2008toworkfulltimeabroadandyouvisitthe
UKfor:
74daysinthetaxyear200809(320daysintheremainderofthetaxyear)
94daysinthetaxyear200910(365daysinthetaxyear)
92daysinthetaxyear201011(365daysinthetaxyear)
79daysinthetaxyear201112(366daysinthetaxyear)
Theannualaverageofyourvisitswouldfirstbecalculatedaftertheendofthetaxyear
200910.YouwillberesidentintheUKforthewholeof200809,regardlessofhowfew
daysyouspentthereafter20May2008,althoughyouwillbeentitledtosplityear
treatmentifyoumettheconditionsinESCA11(seeparagraph8.1.1onpage44).
Theaverageofyourvisitswouldbeasfollows:
200910
(74+94)(320+365)x365=89.5days.Thismeansthatyouarenotresident
201011
(74+94+92)(320+365+365)x365=90.4days.Thismeansthatyouarenotresident
201112
(74+94+92+79)(320+365+365+366)x365=87.4 days.Thismeansthatyouare
notresident
Thecalculationofaveragevisitsfortheyear201213willnotincludethevisitsorrelevant
daysfortheyearofdeparture.Therollingperiodoffouryearsismaintainedbyexcluding
theoldestyearateachannualreview.
AnydaysyouspendintheUKbecauseofexceptionalcircumstancesbeyondyourcontrol,
forexampleanillnesswhichpreventsyoufromtravelling,arenotnormallycountedfor
thispurpose.

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Example2
IfyouweretoleavetheUKon17October2008toworkfulltimeabroadandyouvisit
theUKfor:
50daysinthetaxyear200809(170daysintheremainderofthetaxyear)
86daysinthetaxyear200910(365daysinthetaxyear)
88daysinthetaxyear201011(365daysinthetaxyear)
92daysinthetaxyear201112(366daysinthetaxyear)
Theannualaverageofyourvisitswouldfirstbecalculatedaftertheendofthetaxyear
200910.YouwillberesidentintheUKforthewholeof200809,regardlessofhowfewdays
youspentthereafter17October2008,althoughyouwillbeentitledtosplityeartreatmentif
youmettheconditionsinESCA11(seeparagraph8.1.1onpage44).
Theaverageofyourvisitswouldbeasfollows:
200910
(50+86)(170+365)x365=92.8days.Thismeansthatyouareresident
201011
(50+86+89)(170+365+365)x365=91.3days.Thismeansthatyouareresident
201112
(50+86+88+91)(170+365+365+366)x365=91.1 days.Thismeansthatyouareresident
InthisexampleyouwouldbetreatedasremainingresidentandordinarilyresidentintheUK
andyouwouldnotmeettheconditionsofESCA11.
Thecalculationofaveragevisitsfortheyear201213willnotincludethevisitsorrelevantdays
fortheyearofdeparture.Therollingperiodoffouryearsismaintainedbyexcludingtheoldest
yearateachannualreview.
AnydaysthatyouspendintheUKbecauseofexceptionalcircumstancesbeyondyourcontrol,
forexampleanillnesswhichpreventsyoufromtravelling,arenotnormallycountedfor
thispurpose.
Ifyoudonotmeetalloftheseconditions,youwillremainresidentandordinarilyresidentin theUKunlessparagraph8.1appliestoyou. IfyouremploymentcomestoanendandyoudonotreturntotheUKitwillbenecessaryto considerifyoucontinuetobenotresidentandnotordinarilyresidentintheUK.

8.6ReturningtotheUKafterworkingabroad
Youcanfindmore informationontheUK taxliabilityofpeople whohavebeen temporarilynonresident intheUKinpart5ofthis guidance see5.11.

Ifyouwerenotresidentandnotordinarilyresidentwhenyouwereworking abroadandyoureturntotheUKwhenyouremploymentends,youwillbenot residentandnotordinarilyresidentintheUKuntilthedaybefore youreturnto theUK.Youwillbecomeresidentandordinarilyresidentonthedayyoureturn totheUKunlessyoucanshowthatyourreturnwassimplyashortvisittothe UKbetweentwoperiodsoffulltimeemploymentabroad. However,ifyouhavepreviouslybeenresidentintheUKandarereturningto becomeresidenthereagainafteraperiodofresidenceabroad,youmightneed toconsiderwhetheryourabsencefromtheUKwasaperiodoftemporary nonresidence.IfyouweretemporarilynonresidentintheUK,thismayaffect yourliabilitytoUKtaxwhenyoureturntobecomeresidentintheUKagain.

8.7Changestoyouremploymentwhenabroad
Ifyourcircumstanceschangewhileyouareabroad,forexamplethereisa breakinfulltimeemployment,youmightnolongermeettherequirementsof paragraph8.5andsoremainresidentandordinarilyresidentintheUK.You musttellusaboutsuchchangesbycontactingyourtaxoffice. YoumustalsotelluswhenyoureturntotheUKattheendofanoverseas employment,evenifyouareplanningtogoabroadagaintoworkunderanew contractofemployment.Youmustdothiseventhoughyouseeyourreturnto theUKastemporaryandforaveryshortperiod.Youshouldtellusthis informationbycontactingyourtaxoffice.
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Youcanfindyourlocal taxofficeinThePhone Book orgoto www.hmrc.gov.uk

8.8LeavingtheUKtobecomeselfemployedabroad
IfyouareleavingtheUKtoworkabroadforyourselfinatrade,professionor vocation,thenaslongasyourworkingcircumstancesaresimilartothose outlinedinparagraph8.5,youwillbetaxedinthesameway.

8.9LeavingtheUKwithyourspouseorpartner
Whenyourhusband,wifeorcivilpartnerleavestheUKtoworkabroadwithin thetermsofparagraphs8.5or8.8,youareabletoreceivethesametax treatmentifyouaccompanyorlaterjointhemabroad.Thistreatmentisby concession(ExtraStatutoryconcessionA78)andmeansthatevenwhenyou yourselfarenotinfulltimeemploymentabroad,youwillalsobenotresident andnotordinarilyresidentintheUKfromthedayafteryourdeparture.This treatmentwillapplyaslongas: youwillbeabsentfromtheUKforatleastawholetaxyear,and yourvisitstotheUKafteryouhaveleft totallessthan183daysinanytaxyear,and averagelessthan91daysataxyear.Thisaverageistakenoverthe periodofabsenceuptoamaximumoffouryearssee8.5whichwill showyouhowtoworkoutthisaverage.Anydaysthatyouspendinthe UKbecauseofexceptionalcircumstancesbeyondyourcontrol,forexample anillnesswhichpreventsyoufromtravelling,arenotnormallycounted forthispurpose. YouwillremainnotresidentandnotordinarilyresidentintheUKuntiltheday before youreturntotheUK.Youbecomeresidentandordinarilyresidenton thedayyoureturntotheUK.
Moreinformationinthisguidance

Youcanfindmoreinformationonwhathappenstoyouwhenyouleavethe UK,elsewhereinthisguidance: taxtreatmentintheyearyouleavetheUKpart2,paragraph2.4 personaltaxallowancesintheyearyouleavetheUKpart6, paragraph6.7 investment(unearned)incomepart10 earnedincomepart10.

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9DoubleTaxationRelief(DTR)and DoubleTaxationAgreements(DTAs)
Youcanfinddetailed informationabout individualDTAsinour DoubleTaxationRelief Manual andDigestof DoubleTaxation Agreements at www.hmrc.gov.uk

Differentcountriesandstateshavetheirowntaxrulesandlaws.Whenyou
haveincomeandgainsfromonecountryandyouareresidentinanother,or
youareresidentinboth,youmaybeliabletopaytaxinbothcountriesunder
theirdifferenttaxlaws.Toavoiddoubletaxationinthissituation,theUKhas
negotiatedDoubleTaxationAgreementswithmanycountries.
DTAsaredesignedtoprotectagainsttheriskofanindividualoracorporate
entitybeingtaxedtwicewherethesameincomeistaxableintwocountries.
Ifyouareresidentinmorethanonecountryitislikelythatyourtaxaffairsare
complex.ThewayDTAsaffectyouwilldependuponyourindividual
circumstancesandthetermsoftherelevantDTA.
DTAsalsoprovidedetailsofotherthingswhichcanaffectyourliabilitytoUK
tax,suchaswhetherornotyouareabletoclaimpersonaltaxallowances,and
forwhattypesofincomeandatwhatrateyouwillreceiverelieffromtax.
ToobtainrelieffromUKtaxunderthetermsofaDTAitwillbenecessaryfor
youtomakeaclaimundertherelevantDTA.
AtableshowingthecountrieswithwhichtheUKhasaDTAinforcecanbe
seenatparagraph9.3.ThistableiscorrectasatApril2010anddoesnotshow
theindividualcontentofeachDTA,simplythefactthananagreementexists.

9.1NonUKresidents
IfyouarearesidentofacountrywithwhichtheUKhasaDTAandnot residentintheUK,youmaybeabletoclaimexemptionorpartialrelieffrom UKtaxoncertaintypesofincomefromUKsources.Youmayalsobeableto claimexemptionfromCapitalGainsTaxonthedisposalofassets. YoucanfindthepreciseconditionsofexemptionorreliefintherelevantDTA. ItisnotpossibletogivefulldetailshereastheyvaryfromDTAtoDTA.

9.1.2IncomewhichcanreceivereliefunderaDTA
Youcanfinddetailed informationabout individualDTAsinour DoubleTaxationRelief Manual andDigestof DoubleTaxation Agreements at www.hmrc.gov.uk

Normally,youwillreceivesomerelieffromUKtaxonthefollowingsourcesof incomeunderaDTA. Pensionsandsomeannuities(otherthanUKGovernmentpensions see9.1.3). Royalties.


Dividendssee9.1.9.
Interest.
Someagreementsstatethatyoumustbe:
subjecttotaxintheothercountryinquestion,or
thebeneficialowneroftheincomeintheothercountryinquestionbefore yougetrelieffromUKtax.

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9.1.3UKGovernmentpensions
IfyoureceiveapensionpaidbytheUKforservicetotheUKGovernmentorto alocalauthorityintheUK,itwillusuallybetaxedonlybytheUK.

9.1.4ReliefunderaDTAwhencarryingonatradeorbusiness
Apermanent establishment will usuallyincludeaplaceof management,abranch oranoffice,among otherthings.

Ifyouarecarryingonatradeorrunningabusinessthroughapermanent establishmentintheUK,youmaynotqualifyforrelieffromUKtaxon royalties,interestordividendsconnectedwiththepermanentestablishment. DTAswilloftendefinewhatisincludedinpermanentestablishment.

9.1.5Earningsfromemploymentandprofessionalservices
ThedetailofeachDTAis differentandyoushould alwayscheckthecontent oftheDTAwhichis specifictoyour particularcircumstances. SomeDTAshave differentrulesfor companydirectors.You shouldcheckthecontent oftheDTAwhichis specifictoyour particularcircumstances. Youshouldkeeprecords ofanyworkdoneinthe UK,coveringboththe natureoftheworkand theextent.Forthese purposespartdaysare recordedasworkdays, notjustthosedays whereyouareintheUK atmidnight.Thisis especiallyimportantif youareworkingbothin theUKandabroad. Remuneration iswhat youarepaidforyour workorservices.

Theguidanceinthissectionwillnotapplyifyouareanentertainer,sportsman orsportswoman. Differentrulesapplytopeopleinthosecategoriessee9.1.8. IfyouarenotresidentintheUK,andyouarenotanentertainer,sportsmanor sportswoman,youmaybeabletoclaimexemptionfromUKtaxundermost DTAson: earningsfromanemploymentintheUK,and profitsorearningsforindependent,personalorprofessionalservicescarried outintheUK. UsuallythereareconditionstobemetbeforereliefisgivenunderaDTA. Theseare: foremployments youmustnotbeintheUKformorethan183daysintheperiodspecified intheDTA(oftentwelvemonths),and yourremunerationmustbepaidby(oronbehalfof)anemployerwho
isnotresidentintheUK,anditmustnotbebornebyaUKbranchof
youremployer
forindependent,personalorprofessionalservices youmustnotoperatefromafixedbaseintheUK(or,inthecaseofsome DTAs,spendmorethanaspecifiednumberofdaysintheUK).

9.1.6Teachersandresearchers
UndermanyDTAs,ifyouareateacherorprofessorwhocomestotheUKto teachinaschool,college,universityorothereducationalestablishmentfora periodoftwoyearsorless,youareexemptfromUKtaxonyourearningsfrom theteachingpost.TemporaryabsencesfromtheUKduringthisperiod normallycountaspartofthetwoyears. Someagreementscoverpersonswhoengageinresearch.Wherethisisso,the rulesarenormallythesameasforteachers.

ThedetailofeachDTAis differentandyoushould alwayscheckthecontent oftheDTAwhichis specifictoyour particularcircumstances.

IfyoustayformorethantwoyearsthenundermostoftheseDTAsyoucannot claimtheexemptionandyouwillbeliabletotaxonthewhole ofyour earningsfromthedateyouarrived.SomeDTAsallowexemptiontobegiven onlyiftheearningsareliabletotaxinyourhomecountry.Ifyouhavealready receivedexemptionforavisit(orvisits)ofuptotwoyears,someDTAswill notallowyoutoclaimtheexemptionagainifyoumakeafurthervisitata laterdate.

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9.1.7Studentsandapprentices
UndermostDTAs,ifyouareanoverseasstudentorapprenticevisitingtheUK solelyforfulltimeeducationortraining,youwillnotpaytaxonpayments fromsourcesoutsidetheUKforyourmaintenance,educationortraining. AnumberofDTAsalsoprovidethatstudentsorapprenticesvisitingthis countrywillbeexemptfromUKtaxoncertainearningsfromemployment here.IndividualDTAsimposevariousrestrictionsonthisrelief,including monetarylimitsandconditionsastothetypeofemployment.

9.1.8Entertainers,sportsmenandsportswomen
Forguidanceonhow yourincomeasan entertainer,sportsmanor sportswomanistaxedin theUKyoushould contacttheForeign EntertainersUnit.Youcan findtheiraddressand contactdetailsinpart13 ContactingHMRC.

UndermostDTAs,ifyouarenotresidentintheUKanypaymentsyou receivedirectlyorindirectlyconnectedtoperformancesintheUKwillbeliable toUKtax.Thisincludesactorsandmusiciansperformingonstageorscreen, andthoseparticipatinginallkindsofsports. Theexemptiondescribedin9.1.5doesnotapplytoentertainers,sportsmen andsportswomen.

9.1.9Dividends
UKresidentsareentitledtoataxcreditwhentheyreceiveadividendfrom acompanyresidentintheUK.WechargeIncomeTaxonthetotalof thedividendandthetaxcredit.Thetaxcreditisavailabletoreducetheir taxliability. Ifyouarenotresident intheUK,youwillnotreceivepaymentinrespectofa taxcreditwhenyoureceiveadividendfromaUKcompany.

UKDTAsnegotiatedsince April1999donot provideforpaymentof taxcredit.

From6April1999,thoseDTAsthatstillprovideforpaymentofataxcredit ondividendspaidbyUKcompaniescontinuetogivearighttoclaimatax creditinexcessoftheamountwhichtheUKisentitledtoretain.Becausethe rateoftaxcreditwasreducedfrom6April1999from20%to10%,the amountwhichtheUKisentitledtoretainunderthoseagreementswill,in practice,coverthewholeofthetaxcredit.Soifyoumakeaclaimundersucha DTA,whereadividendhasbeenpaidonorafter6April1999,therewillbeno balanceoftaxcreditleftforustopaytoyou. YoumayalsohavetherighttoataxcreditifyoureceiveUKpersonaltax allowancesandreliefsthroughaclaimunderaDTAsee6.6.Butifyoucan onlyclaimtheseallowancesbecauseofthetermsofaDTA,whetherornotyou areentitledtothetaxcreditwillalsodependonthetermsoftheagreement.

9.1.10Capitalgains
ThedetailofeachDTAis differentandyoushould alwayscheckthecontent oftheDTAwhichis specifictoyour particularcircumstances.

UndermanyDTAs,ifyouarearesidentofanothercountry,youmaybeliable totaxonlyinthatcountryonanygainsyoumakefromdisposingofsome typesofassets.Inthatcase,youwillbeexemptfromCapitalGainsTaxinthe UKevenifyouareordinarilyresidenthere.Butifyouareresidentinanother countryonatemporarybasis,andthenreturntoberesidentintheUK,you maybechargedCapitalGainsTaxondisposalsyoumadewhenyouwerenot UKresidentandnotordinarilyresident. Butifyouarecarryingonatradeorrunningabusinessthroughapermanent establishmentintheUK,anygainsthatyoumakefromdisposingofassets connectedwiththepermanentestablishmentwillcontinuetobechargeableto CapitalGainsTaxintheUK.

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9.2UKresidents
IfyouareresidentintheUKandhaveforeignincomeorgainswhichare taxableinthecountryinwhichtheyariseoraccrue,youmayqualifyforrelief againstUKtaxonthoseincomeorgainsforallorpartoftheforeigntaxthatyou havepaid.EvenifthereisnoDTAbetweentheUKandtheothercountry concerned,youmaystillbeentitledtoreliefunderspecialprovisionsinthe UKstaxlegislation.

9.3TheUKsDTAs
ThesearethecountrieswithwhichtheUKhasaDTAinforcecoveringtaxes onincomeand/orcapitalgains.Thelistdoesnotincludelimitedagreements whichareconcernedsolelywithairtransportandshipping. ThelistiscompleteasatApril2010.
AntiguaandBarbuda Argentina Australia Austria Azerbaijan Bangladesh Barbados Belarus Belgium Belize Bolivia BosniaHerzegovina Botswana Brunei Bulgaria Burma(Myanmar) Canada Chile China Croatia Cyprus CzechRepublic Denmark Egypt Estonia FalklandIslands FaroeIslands Fiji Finland France Gambia Georgia Germany Ghana Greece Grenada Guernsey Guyana Hungary Iceland India Indonesia Ireland(Republicof) IsleofMan Israel Italy IvoryCoast (CotedIvoire) Jamaica Japan Jersey Jordan Kazakhstan Kenya Kiribati Korea(Republicof) Kuwait Latvia Lesotho Libya Lithuania Luxembourg Macedonia Malawi Malaysia Malta Mauritius Mexico Moldova Mongolia Montenegro Montserrat Morocco Namibia Netherlands NewZealand Nigeria Norway Oman Pakistan PapuaNewGuinea Philippines Poland Portugal Romania RussianFederation StKittsandNevis SaudiArabia Serbia SierraLeone Singapore SlovakRepublic (Slovakia) Slovenia SolomonIslands SouthAfrica Spain SriLanka Sudan Swaziland Sweden Switzerland Taiwan Tajikistan Thailand TrinidadandTobago Tunisia Turkey Turkmenistan Tuvalu Uganda Ukraine USA Uzbekistan Venezuela Vietnam Zambia Zimbabwe

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9.4Dualresidence
Helpsheet302is availableat www.hmrc.gov.uk/ helpsheets/hs302.pdf

Youcanberegardedasaresidentofmorethanonecountry(dualresident). Helpsheet302DualResidents explainshowmostDTAsresolvethequestionof dualresidenceandhowliabilitytoUKtaxcanbeaffectedbytheoutcome. SincenotallDTAsarethesame,itisessentialwhenconsideringwhetherany relieffromUKtaxmaybedue,tolookatthetextoftheparticularagreement concerned,astheyvaryfromagreementtoagreement.

9.4.1ResidenceforthepurposesofaDoubleTaxationAgreement consequencesfortaxliability
TheresidencepartofmostmodernDTAsprovidestiebreakerrulesfor determininginwhichofthetwocountriesanindividualwhoisdualresident undertherespectivedomesticlawsshouldbetreatedasresidentforthe purposesoftheAgreement.Themostcommonlyfoundtiebreakertestsare: permanenthome
centreofvitalinterests
habitualabode
nationality.
IfallthesetestsproveinconclusiveDTAsnormallyprovideforthetax
authoritiesofthetwocountriestosettlethematterbynegotiation.Inpractice,
veryfewclaimsreachthisstage.
IfthetiebreakerrulesawardresidenceforthepurposesoftheDTAtotheother
country,UKtaxliabilityisusuallyaffected.Ifthetiebreakerrulesaward residenceforthepurposeoftheDTAtotheUK,youwillremainliabletoUK taxasaUKresident.Youmay,however,beentitledtorelieffromtaxinthe othercountryasaresidentoftheUKforthepurposesoftheDTA.

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10Typesofincome
Youcanfindmore informationinthis guidancetohelpyou decideyourpositionon: residencepart2 ordinaryresidence part3 domicilepart4. Youcanfindother informationtohelpyou understandwhatwe meanbytheUK at12.24 andabroad,foreign and offshore at12.1,12.9 and12.14.

Thispartprovidesaseriesoftablessothat,dependingonyourindividual circumstances,youcanseewhichtypesofincomearetaxableintheUK.There isadditionalinformationtohelpyouunderstandthetablesandtoapplythem toyourindividualcircumstances. Beforeusingthetablesyoumustdecide,byreferencetotheguidanceprovided earlier,ifyouare: residentornotresidentintheUK ordinarilyresidentornotordinarilyresidentintheUK domiciledornotdomiciledintheUK. WhenyouareliabletoUKtaxitmeansthatyouwillpayUKtaxonthe income,afteranyallowancesandothertaxreliefsyouareentitledto. Thefirstpartofthissectiondealswithearnedincomeandthesecondpartwith investmentincome.

10.1Earnedincome
SomeUKSocialSecurity benefitsareliabletoUK tax.Theseincludethe StatePensionand Widowspayments.You shouldrememberto includeanytaxable benefitswhen calculatingyourtaxable incomeforataxyear.

Earnedincomeisanypaymentthatyoureceiveasaresultofanemployment, fromatrade,professionorvocationyouhave,orfromapensionyoureceive. YoucanearnincomebothintheUKandanywhereelseintheworld.WhatUK taxyouhavetopayonyourearnedincomewilldependonwhetheryouare residentornotresidentintheUK.IfyouareresidentintheUKbutareeither notordinarilyresidentornotdomiciledhere,youmightwishtousethe remittancebasisoftaxation.ThiswillaffecttheamountofUKtaxyouhaveto payonincomeearnedfromoutsidetheUK.YouwillalwaysbeliabletoUK taxonincomeearnedintheUK. Ifyoureceiveincomeorgainsfromemploymentrelatedshareschemesyou shouldkeepfullrecords,forexampleofacquisition,termsandrealisationto showwherethedutiesthatrelatetotheawardofshareswereperformed.

10.2EarnedincomeWhenyouareresidentintheUK
Youcanfindmore informationonthe remittancebasisinpart5. Anexplanationofthe arisingbasisisat12.3.

Unlessyouareabletousetheremittancebasis,whenyouareresidentinthe UKyouareliabletoUKtaxonthearisingbasisoftaxation.Thismeansthat youareliabletoUKtaxonallofyourearnedincome,whereveritarises.

10.2.1Earningsyoureceivefromanemployer
See10.6formore informationonwhere yourdutiesof employmentare carriedout. See10.8formore informationonyour liabilityfromatrade, professionorvocationif youbecomenonresident intheUK.

WhenyouareliabletoUKtaxonthearisingbasis,youaretaxedintheUKon yourearningsfromanyemployments,whetheryourdutiesofemploymentare carriedoutintheUKorabroad. IfyoucanandchoosetobeliabletoUKtaxontheremittancebasis,yourUK employmentearningsaretaxedintheUKbutanyearningsfromemployment abroadwillonlybetaxediftheyareremittedhere. ButifyouareresidentandordinarilyresidentintheUK,butarenotdomiciled here,theremittancebasiswillapplyonlytoforeignemploymentincomewhere theemploymentisperformedwhollyoutsidetheUKforaforeign(nonUK) employer.Aforeignemployerisanindividual,partnershiporbodyofpersons residentoutside,andnotresidentin,theUK.YouwillbeliabletoUKtaxon thearisingbasisforanyUKemploymentincomeandforanyoverseas employmentincomewhereany ofthedutiesofemploymentarecarriedoutin theUK.
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Ifyouroverseasemploymentdutiesareperformedwhollyorpartlyoutsidethe UKforaUKemployeryouwillnot beabletoclaimtheremittancebasisand theincomewillbeliabletotaxintheUKonthearisingbasisseetable 10.10.1,note3(b). Thetableat10.10.1willhelpyoutoseewhatUKtaxyouwillpayonyour incomeearnedfromemployments.

10.2.2Earningsfromatrade,professionorvocation
WhenyouareliabletoUKtaxonthearisingbasisyouaretaxedintheUKon yourearningsfromanytrade,professionorvocation,whetherthetrade, professionorvocationiscarriedoutintheUKorabroad. IfyouareliabletoUKtaxontheremittancebasis,yourearningsfromany trade,professionorvocationcarriedoutintheUKaretaxedintheUKbutany earningsfromatrade,professionorvocationcarriedoutwholly outsidetheUK willbetaxedonlyiftheyareremittedhere. Thetableat10.10.2willhelpyoutoseewhatUKtaxyouwillpayonyour incomeearnedfromatrade,professionorvocation.

10.2.3Pensions
WhenyouareliabletoUKtaxonthearisingbasisyouaretaxedintheUKon mostpensionswhethertheyarefromtheUKorabroad.Ifyoureceivepension paymentsfromoutsidetheUK(anoverseaspension)youmightbeentitledtoa 10%deductionfromtheamountchargeable. Ifyoureceivelumpsumsfromoverseaspensionschemesorprovidentfunds, theguidanceat10.9explainsyourUKtaxliabilityonthelumpsumpayments thatyoureceive. IfyouareliabletoUKtaxontheremittancebasis,youwillpayUKtaxonany UKpensionsthatyoureceivebutanyoverseaspensionswillonlybetaxedif theyareremittedhere.Youarenotentitledtothe10%deductionforoverseas pensionswhenyouusetheremittancebasis. Thetableat10.10.3willhelpyoutoseewhatUKtaxyouwillpayonyour incomefrompensions.

10.3EarnedincomeSeafarersEarningsDeduction
Youcanfindmore informationontheSED atwww.hmrc.gov.uk Youcanalsophoneour specialistteamsdealing withseafarersatSouth WalesAreaOffice, Cardiff.Contactdetails areinpart13 ContactingHMRC.

Ifyouareaseafarer(ormariner)whoisresidentandordinarilyresidentinthe UKyoumightbeentitledtoadeductioninyourUKtax.Thisiscalledthe SeafarersEarningsDeduction(SED). Aseafarerisapersonwhoperformsthedutiesoftheiremploymentonaship. Anoffshoreinstallation,forexampleanoilrig,isnotashipforthepurposes ofSED. TheSEDisavailableonlytoseafarers.

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10.4EarnedincomeWhenyouarenotresidentintheUK 10.4.1Earningsyoureceivefromanemployer
Althoughyouarenot residentintheUKyouwillstillpayUKtaxonany employmentdutieswhichyoucarryoutintheUKunlessthoseUKdutiesare merelyincidentaltoanemploymentabroadsee10.6. Youwillnot payUKtaxonanyemploymentdutieswhichyoucarryout whollyabroad. IfyouremploymentdutiesarecarriedoutpartlyintheUKandpartlyabroad youneedtokeepdetailsoftheemploymentforexamplethosedaysyou spendworkingintheUKandthoseworkingabroadtoallowyoutoidentify theearningsyouhavereceivedfordutiescarriedoutintheUK.Theduties carriedoutintheUKwillbeliabletoUKtax.Wemayasktoseetherecords onwhichsuchcalculationsarebased. Thetableat10.10.1willhelpyoutoseewhatUKtaxyouwillpayonyour incomeearnedfromemployments.

10.4.2Earningsyoureceivefromatrade,professionorvocation
See10.6formore informationonwhere yourdutiesof employmentare carriedout. See10.8formore informationonyour liabilityfromatrade, professionorvocation ifyoubecome nonresidentintheUK.

Althoughyouarenot residentintheUKyouwillstillpayUKtaxonany
incomeorprofitsfromatrade,professionorvocationthatyoucarryout
whollyintheUK.
Youwillnot payUKtaxonanyincomeorprofitsfromatrade,professionor
vocationthatyoucarryoutwhollyabroad.
Ifyoucarryoutyourtrade,professionorvocationpartlyintheUKandpartly
outsidetheUKyouwillpayUKtaxontheincomeorprofitsfromthepartof
thetrade,professionorvocationcarriedoutintheUK.
Thetableat10.10.2willhelpyoutoseewhatUKtaxyouwillpayonyour
incomeearnedfromatrade,professionorvocation.

10.4.3Pensions
Althoughyouarenot residentintheUKyouwillstillpayUKtaxonmost
pensionsfromsourcesintheUK.
Youwillnot payUKtaxonpensionsfromsourcesoutsidetheUK.
Thetableat10.10.3willhelpyoutoseewhatUKtaxyouwillpayonyour
incomefrompensions.

10.4.4DoubleTaxationAgreements
Youcanfindmore informationonDouble TaxationAgreementsin part9ofthisguidance.

Assomeonenot residentintheUK,youmightbeabletomakeaclaimunder aDoubleTaxationAgreement(DTA)foryourUKearningsorpensions, includingtaxableUKSocialSecuritybenefits,tobeexemptfromUKtax. ThiswilldependonthecontentofanyDTAbetweentheUKandtheother countryconcerned. If,forthewholetaxyear,youarenotresidentandyoudonotclaimrelief underthetermsofaDTA,yourliabilityontaxableUKSocialSecuritybenefits islimitedtothetax,ifany,deductedbeforepayment.

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10.5Offshoreoilandgasworkers
Offshore means: theUKterritorialsea (see12.24) theUKcontinental shelf(see12.25). See10.3formore informationonthe SEDtheSeafarers EarningsDeduction.

IfyouareworkingoffshoreintheUKoilorgasexplorationorexploitation industryyouarenotaseafarerandarenoteligibletotheSEDunlessyouare onaship. IfyouareanonUKresidentworkingoffshoreintheUKoilandgasindustry andyourworkisbeingcarriedoutontheUKcontinentalshelfbutoutsidethe UKsterritorialwatersitwillbetreatedasbeingperformedintheUKforthe purposesoftaxingyouremploymentincome.YourearningswillbeUKearned incomeandbesubjecttoUKtax.Youshouldaddressanyqueriesthatyou haveabouttherepaymentofthattaxtoSouthWalesArea,Cardiff(seepart 13)andnot toanyotherHMRCoffice.Youmightnotbeduearepaymentof UKIncomeTax. IfyouarearesidentofacountrywithwhichtheUKhasaDoubleTaxation Agreement(DTA)theremightbespecificprovisionsfortheoffshoreoiland gasindustry.Youshouldaddressanyqueriesthatyouhaveaboutto SouthWalesArea,Cardiff(seepart13ContactingHMRC).

10.6EmploymentincomeWhereyourdutiesarecarriedout
Ifyouarenotresident intheUKoryouusetheremittancebasis,whereyou actuallycarryoutyourdutieswilldetermineifyourearnedincomeisUK incomeorisincomeearnedabroad.IncomeistaxedintheUKbaseduponthe factsofwheretheduties,forwhichyouarebeingpaid,werecarriedout.

See10.3formore informationonseafarers andparticularlythe SEDtheSeafarers EarningsDeduction. Youcanfindmore informationonDouble TaxationAgreementsin part9ofthisguidance.

Seafarersandaircrew
Individualsworkingoninternationalplanes,shipsandtrainsareperforming UKdutiesiftheytravelthroughtheUK,UKairspace,UKterritorialwatersor UKcontinentalshelf.TheextenttowhichthewholejourneyisconsideredUK dutieswilldependbothonwhetherthejourneystartsorendsintheUK,and whetherornotyouareUKresident.IfyouarenotresidentintheUK,whether youarerelievedfromUKtaxondutiescarriedoutintheUKwilldependon thetermsofanyrelevantDoubleTaxationAgreement(DTA).Itmayalsobe dependentonthecountryofresidenceofthecompanyoperatingtheshipor aircraftonwhichyouareemployed.Youwillneedtofindouttheresidenceof theoperatorandlookatrelevantarticlesoftheDTAsinvolved.

Otherworkers
Ifyourworkisnormallycarriedoutabroadbutyouhavetocarryoutsomeof yourdutiesintheUK,theworkyoudointheUKwillbepartofyourduties abroadonlywhen youcanshowthattheworkyoudidintheUKwasmerely incidental tothedutiesofyouremploymentabroad. WhetherornotdutiesperformedintheUKaremerelyincidentaltoanoverseas employmentwillalwaysdependonthecircumstancesofeachparticularcase. AnydecisionhastobebasedonthenatureoftheworkcarriedoutintheUK andnotsimplytheamountoftimespentonit. IftheworkthatyouperformintheUKisthesameorisofsimilarimportance totheworkthatyoudoabroad,itwillnot bemerelyincidental.Youwillhave toshowthatthereisapurposetotheworkyoudidintheUKwhichenabled youtodoyournormalworkabroadandwhichyoucouldonlydointheUK.

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ExamplesofworkcarriedoutintheUKaspartofanoverseasemployment: incidentalwork timespentintheUKbyanoverseassalesrepresentativeofaUKcompanyto makereportsorreceivefreshinstructions ashortperiodoftimespenttrainingintheUKbyanoverseasemployee, providedthatnoproductiveworkiscarriedoutintheUKbythetrainee nonincidentalwork timespentintheUKaspartofthedutiesofamemberofthecrewofaship oraircraft attendanceatdirectorsmeetingsintheUKbyadirectorofthecompanywho normallyworksabroad.

10.7Earnedincomefromemploymentwhenyoucometoorleave theUKpartwaythroughataxyear
Thefollowingguidancerelatesonlytoincomethatyouearnasanemployee. Allothertypesofearnedincomearetaxedinthesamewayasunearned incomesee10.11.

WhenyoubecomeresidentintheUK
IfyoucometotheUKduringataxyeartotakeuppermanentresidenceorto stayforatleasttwoyears,youareresidentintheUKforthewholeofthattax year.Butthereisaconcession(subjecttoconditions)whichallowsyoutobe taxedasanonresidentforthepartofthetaxyearbeforeyoubecameresident (ExtraStatutoryConcessionA11).Thismeansthattheforeignincomeyou receivedbeforeyouarrivedintheUKwillnotbeliabletoUKtax. WhenyouareresidentintheUKanyleavepayyoureceiveisnormallytaxable. Ifyouhavebeenworkingabroadandarepaidforaperiodofleavespentinthe UK,itwillbetaxedhereasterminalleavepay.Itistaxedasarisinginthe periodtowhichitrelatesevenifyourentitlementtotheleavepaywasbuilt upduringaperiodofoverseasemployment.Ifyouareabletoclaimthe SeafarersEarningsDeduction,youmaybeexemptfromUKtaxonyour leavepaybutthiswilldependonyourindividualcircumstances.Anyleavepay youreceiveforaperiodwhenyouareresidentandordinarilyresidentis normallytaxable.

Youcanfindmore informationaboutthe SeafarersEarnings Deductionat10.3.

WhenyoustopbeingresidentintheUK
IfyouleavetheUKduringataxyearforfulltimeserviceunderacontractof employment,theconcessionwhichappliestothosepeoplearrivinginand becomingresidentintheUKduringataxyear(ExtraStatutoryConcession A11)worksinasimilarway,subjecttocertainconditions.Theconcession allowsyoutobetaxedasanonresidentforthepartofthetaxyearafteryou lefttheUK.Thismeansthattheforeignincomeyoureceiveinthetaxyear afteryouleavetheUKandbecomenonresidentwillnotbeliabletoUKtax.

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10.8ComingtoorleavingtheUKifyoucarryoutatrade,profession orvocation
Ifyoucarryoutatrade,professionorvocationthereareprovisions whichapplywhenyoustartorendthebusiness(commencementand cessationprovisions). IfyouhavebeencarryingoutabusinesswhollyorpartlyoutsidetheUK andyou: becomeresidentintheUK,or stopbeingresidentintheUK then,insomecases,andprovidedyourbusinessiscontinuingdespitethe changeinyourUKresidencestatus,atthatpointyouaredeemedtohave endedonebusinessandstartedanother.Thismeansthatspecialcessation provisionsapplyuptothedateofdeemedcessationandspecial commencementprovisionsapplyfromthedateofdeemedcommencement. Thismayaffecttheamountoftaxthatyouhavetopay. NormallythecessationandcommencementofresidenceintheUK(and thereforethedeemedcessationandcommencementoftrade)takesplaceatthe startofthetaxyearinwhichyourchangeofresidenceoccurs.Despitethe deemedcessationofonebusinessandcommencementofanother,wherethis applies,anylossesincurredbythebusinessbeforethechangeinyourUK residencestatuscanbecarriedforwardandsetagainsttheprofitsofthe deemedcommencingbusiness. Thiswillnotapplytoalltrades,professionsorvocations.Itwilldependon wherethebusinessiscarriedoutratherthanonwheretheproprietorofthe businessresides. Achangeinyourresidencestatuswillusuallytriggerthecessationofone businessandthecommencementofanother.Mosttradesandprofessionsare carriedoutinaparticularlocationsuchasashoporfactory.Thismeansthat changingthelocationofabusiness(forexamplefromonecountrytoanother) willusuallyresultinthenewbusinessbeingdifferentfromtheoldone.Evenif thetypeofbusinessbeingcarriedoutisthesame,thefactthatitisina completelynewlocationislikelytomeanthatithasadifferentstructure, customerbaseandemployees.Whenthisisthecasethenormalrulesforthe cessationandcommencementofabusinesswillapplyandyouwillhaveceased one business and started a new one. You will not be able to carry forward losses from the old business to set against the profits of the new one. There are some businesses which are not localised in this way. These businesses are mainly carried out by professional people, wherever in the world the person happens to be. Examples of this type of trade would be international actors, sportsmen or women, authors and musicians. If you carry out this type of profession and continue to do so in the same way after a change in your UK residence status, you will be liable to UK tax in the year of the change in your UK residence status as follows: when you become resident in the UK you will be liable to UK tax on the proportion of your profits for the full year which reflects the profits made from the date of your arrival in the UK to the following 5 April when you cease being resident in the UK you will be liable to UK tax on the proportion of your profits from 6 April until the date of your departure from the UK.

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10.9Lumpsumsreceivedfromoverseaspensionschemesand providentfunds
Ifyoureceivelumpsumretirementbenefitsfromanoverseaspensionscheme orprovidentfundwhichrelatetoanemploymentoutsidetheUK,youwillnot bechargedUKIncomeTaxorwillbechargedatareducedrate.Thisisby concession(ExtraStatutoryConcessionA10).WhatUKIncomeTaxyouare chargedwilldependontheextentofyourforeignservice. Youwillreceiveafullexemptionwhere,intheemploymenttowhichthe pensionrelates: atleast75%ofyourtotalservicewasabroad,or yourtotalforeignserviceexceeds10yearsandthewholeofthelast10years servicewasabroad,or yourtotalforeignserviceexceeds20yearsandnotlessthan50%ofthetotal servicewasabroad,includingany10ofthelast20years. Ifyoudonotmeettheseconditionsyouwillnotreceiveafullexemption.You willbechargedIncomeTaxonthepercentageofthelumpsumwhichequals yourUKserviceintheemployment.

10.10TablesshowingthescopeofliabilitytoUKtaxfor earnedincome Usingthetables


Thesetablesaredesignedtohelpyouidentifyyourliabilitytoparticulartypes ofincome,basedonyourUKdomicileandUKresidencestatusand,if appropriate,whetheryouclaimtheremittancebasis. YourstartingpointwillbewhetheryouaredomiciledintheUKoroutside theUKandyouwillthenproceedtothequestionofwhetheryouareresident andordinarilyresident,residentandnotordinarilyresidentornotresidentin theUK. Someadditionalnotesofexplanationareprovidedasnotes.

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10.10.1Table1HowemploymentincomeistaxedintheUK
Otherinformation UKresidence seepart2. Ordinaryresidence see
part3.
Domicile seepart4.
Remittancebasis see
part5.
Remittancebasisfor
personsresidentand
ordinarilyresidentbut
notdomiciledintheUK
see10.2.1.
Employmentduties
carriedoutpartlyinthe
UKandpartlyabroad
see10.6.
Domiciled withinthe UK 1Resident and ordinarily resident YourUK domicile status YourUK residence status Arising Basis(AB) or Remittance Basis(RB) claimed Employmentdutiesperformed whollyorpartlyintheUK Duties performed intheUK Duties performed outsidethe UK Liable1 Employment duties performed wholly outsidethe UK

AB

Liable1

Liable1

2Resident andnot ordinarily resident

2(a)AB

Liable

Liable

Liable

2(b)RB

Liable

Liableon remittance

Liableon remittance

3Not resident

AB2

Liable

Notliable

Notliable

Domiciled outsidethe UK

4Resident and ordinarily resident

4(a)AB

Liable1

Liable1

Liable1

4(b)RB

Liable(on AB)3

Liable(on AB)3

Seebelow3

5Resident andnot ordinarily resident

5(a)AB

Liable

Liable

Liable

5(b)RB

Liable

Liableon remittance

Liableon remittance

6Not resident

AB2

Liable

Notliable

Notliable

Notes
Useofthistableissubjecttoanydifferenttreatmentprovidedforunderthetermsofthe relevantarticleinaDoubleTaxationAgreementpart9providesinformationaboutpossible reliefunderaDoubleTaxationAgreement. 1 IndicatesthatyouareliabletopayUKtaxunlesssubjecttoSeafarersEarningsDeduction(SED) see10.3. 2 ForindividualsnotresidentintheUK,thearisingbasisislimitedtoliabilitytoUKtaxonincome arisingintheUK. 3 IfyouareresidentandordinarilyresidentbutarenotdomiciledintheUKtheremittancebasis operatesdifferentlyfromthewayinwhichitworksforindividualswhoareresidentbutnot ordinarilyresidentintheUK.YouareliabletoUKtaxonthearisingbasisforanyearnedincome wherethedutiesareperformedwhollyorpartlyintheUK.TheliabilitytoUKtaxonincome earnedwhollyoutsidetheUKwilldependontheresidencestatusofyouremployer: (a) whenyouremployerisnonUK/foreignresidentliableonremittancebasis (b) whenyouremployerisUKresidentemploymentearningsareliableonarisingbasis.

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10.10.2Table2Howincomefromatrade,professionorvocationis taxedintheUK
Otherinformation UKresidenceseepart2. Ordinaryresidencesee
part3.
Domicileseepart4.
Remittancebasissee
part5.
Domiciled withinthe UK 1Resident and ordinarily resident YourUK domicile status YourUK residence status Arising Basis(AB) or Remittance Basis(RB) claimed Tradeor profession carriedout whollyor partlyin theUK Tradeor profession carriedout wholly outside theUK

AB

Liable

Liable

2Resident andnot ordinarily resident

2(a)AB

Liable

Liable

2(b)RB

Liable

Liableon remittance

3Not resident

AB2

Liable

Notliable

Domiciled outsidethe UK

4Resident and ordinarily resident

4(a)AB

Liable

Liable

4(b)RB

Liable

Liableon remittance

5Resident andnot ordinarily resident

5(a)AB

Liable

Liable

5(b)RB

Liable

Liableon remittance

6Not resident

AB2

Liable1

Notliable

Notes
Useofthistableissubjecttoanydifferenttreatmentprovidedforunderthetermsofthe relevantarticleinaDoubleTaxationAgreement part9providesinformationaboutpossible reliefunderaDoubleTaxationAgreement. 1 YouareliabletoUKtaxontheprofitsofthepartofthetradeorprofessionwhicharecarried outintheUK. 2 ForindividualsnotresidentintheUK,thearisingbasisislimitedtoliabilitytoUKtaxon incomearisingintheUK.

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10.10.3Table3HowincomefrompensionsistaxedintheUK
Otherinformation Lumpsumsreceived fromoverseaspensions schemesandprovident funds see10.9. YourUK domicile status YourUK residence status Arising Basis(AB) or Remittance Basis(RB) claimed UKpension NonUK (overseas) pension

Domiciled withinthe UK

1Resident and ordinarily resident

AB

Liable

Liable1

2Resident andnot ordinarily resident

2(a)AB

Liable

Liable1

2(b)RB

Liable

Liableon remittance2

3Not resident

AB3

Liable

Notliable

Domiciled outsidethe UK

4Resident and ordinarily resident

4(a)AB

Liable

Liable1

4(b)RB

Liable

Liableon remittance2

5Resident andnot ordinarily resident

5(a)AB

Liable

Liable1

5(b)RB

Liable

Liableon remittance2

6Not resident

AB3

Liable

Notliable

Notes
Useofthistableissubjecttoanydifferenttreatmentprovidedforunderthetermsofthe relevantarticleinaDoubleTaxationAgreementpart9providesinformationaboutpossible reliefunderaDoubleTaxationAgreement. 1 Lessa10%deductionsee10.2.3. 2 Ifaclaimtotheremittancebasisismadethenthe10%deductionreferredtoat1aboveisnot availablesee10.2.3. 3 ForindividualsnotresidentintheUK,thearisingbasisislimitedtoliabilityonpensions originatingintheUK.Youshouldalsosee10.1fordetailsofUKSocialSecuritybenefitssuch astheStateRetirementPension.

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10.11Investmentincome
Investmentincomeisanyincomethatyouhavewhichisnotapensionandhas notbeenearnedbyyouasanemployee,bycarryingoutyourprofessionorby runningyourownbusiness. Althoughthisisnotacompletelistunearnedincomeincludes: interestfrombankandbuildingsocietyaccounts dividendsonshares interestonstocks rentalincomereceivedunlesstherentalincomeispartoftheincomeofa tradingbusiness.
Certaintypesof investmentincomefrom sourcesoutsidetheUK arealsoknownas relevantforeignincome. Thistermisparticularly usedtodescribe unearnedforeignincome inrelationtothe remittancebasis see12.20. Youcanfindmore informationonthe remittancebasisin part5ofthisguidance.

InvestmentincomecanariseintheUKandanywhereelseintheworld.What UKtaxyouhavetopayoninvestmentincomewilldependonwhetheryouare residentornotresidentintheUK.IfyouareresidentintheUKbutareeither notordinarilyresidentornotdomiciledhere,youmightwishtousethe remittancebasisoftaxationwhichwillaffecttheamountofUKtaxthatyou havetopayonyourinvestmentincomefromoutsidetheUK.Youwillalways beliabletoUKtaxoninvestmentincomefromUKsources. Thetableat10.15showsUKtaxliabilityoninvestmentincomeandthe guidanceat10.14tellsyouaboutUKtaxliabilityonforeigninvestmentincome whenyoubecomeresidentintheUKpartwaythroughataxyear.

10.12InvestmentincomeWhenyouareresidentintheUK 10.12.1Liabilityonthearisingbasis
Unlessyouareabletousetheremittancebasis,whenyouareresidentinthe UKyouareliabletoUKtaxonthearisingbasisoftaxation.Thismeansthat youareliabletoUKtaxonallofyourinvestmentincome,whereveritarises. Mostbanks,buildingsocietiesandotherdeposittakersintheUKdeductUK taxfrominteresttheypayorcredittoyouraccount.Ifyouareresidentinthe UKbutnotordinarilyresidenthere,youmightbeabletoarrangetohaveyour interestpaidwithoutsuchtaxbeingdeducted.Youcanfindmoreinformation aboutthiscanbefoundin10.13.

FOTRA standsforFreeof TaxtoResidentsAbroad.

AlsowhenyouareresidentintheUKbutnotordinarilyresidenthere,you mightnotbeliabletoUKtaxonUKGovernmentFOTRAsecurities.Youcan findmoreinformationaboutthisin10.13. MostinvestmentincomefromsourcesoutsidetheUKandsomefromsources intheUKwillnothavehadUKtaxdeductedbeforeitispaidtoyou.Thisdoes notmakeitUKtaxfreeandUKtaxmightbedueonsuchincome.You should make sure that you tell us about all such income and that it is included on any Self Assessment tax return that you complete. If the foreign investment income has been subject to foreign tax in the place it was generated, you will normally receive a credit against your UK tax liability. We would expect you to be able to produce documentary evidence of such foreign tax if we were to ask to see it. We will not repay overseas tax deducted from a nonUK source.

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10.12.2Liabilityontheremittancebasis
IfyouusetheremittancebasisyouareliabletoUKtaxonallofyour investmentincomefromUKsourcesbutanyforeigninvestmentincomewill onlybetaxedintheUKifitisremittedhere. Whenusingtheremittancebasis,certaintypesofinvestmentincomefrom sourcesoutsidetheUKisoftenreferredtoasrelevantforeignincome see12.18. Thetableat10.15showsUKtaxliabilityyouhaveoninvestmentincome.The guidanceat10.14tellsyouaboutUKtaxliabilityonforeigninvestmentincome whenyoubecomeresidentintheUKpartwaythroughataxyear.

10.13InvestmentincomeWhenyouarenotresidentintheUK
Althoughyouarenot residentintheUKyouwillstillbeliabletopayUK
taxoninvestmentincomefromUKsources,althoughthereisarestrictionon
yourtaxliabilityforinvestmentincome.Thisrestrictionisnotavailableforany
taxyearinwhichsplityeartreatmentappliessee10.14.Youmightalsobe
abletoreceivetaxreliefunderthetermsofaDoubleTaxationAgreement,if
oneapplies.
Youwillnot beliabletopayUKtaxonanyinvestmentincomefromsources
outsidetheUK.
Thetableat10.15showsUKtaxliabilityyouhaveoninvestmentincome.The
guidanceat10.14tellsyouaboutUKtaxliabilityonforeigninvestmentincome
whenyoubecomeresidentintheUKpartwaythroughataxyear.

10.13.1IncomefrompropertyintheUK
Youcanfindmore informationaboutthe NonResidentLandlord Schemeat www.hmrc.gov.uk

IfyouhaveprofitsfromlettingpropertysituatedintheUK,theyareliableto taxintheUK,evenifyouarenotresidenthere.RetentionoftaxfromUK propertyincomeisdealtwithundertheNonResidentLandlordScheme.If yourusualplaceofabodeisoutsidetheUKand: youreceiverentalincomedirectfromthetenant,thetenantmustfirstdeduct taxatthebasicrateandpayittoHMRC,or alettingagentcollectstherentalincomeforyou,thelettingagentmust deducttaxatthebasicratefromtheincomereceived,lessanyallowable expensespaidonyourbehalf. CreditforanytaxdeductedinthiswaywillbegivenagainstyourUKIncome TaxliabilitywhenyoucompleteaSelfAssessmenttaxreturn. YoucanapplytoPersonalTaxInternationalinLiverpoolforapprovaltohave yourpropertyincomepaidwithouttaxbeingdeducted.Youcanonlyapplyfor thisapprovalifyouundertaketocomplywithallyourUKtaxobligationsand: yourUKtaxaffairsareuptodate,or youhaveneverhadanyUKtaxobligations,or youdonotexpecttobeliabletoUKIncomeTax.

Youcanfindtheaddress andphonenumberof PersonalTax Internationalin Liverpoolinpart13 ContactingHMRC.

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10.13.2UKGovernmentsecurities
FOTRA standsforFreeof TaxtoResidentsAbroad. InterestpaidonFOTRA securitiesispaidwithout UKtaxdeductedandif youareliabletoUKtax andreceiveinterest fromaFOTRAsecurity youmusttellusand makesurethatthe interestyoureceiveis includedonanySelf Assessmenttaxreturn thatyoucomplete.

IfyouarenotordinarilyresidentintheUKyouwillnotpayUKtaxon theinterestthatarisesonUKGovernmentFOTRAsecuritiesunlessthe interestreceivedformspartoftheprofitsofatradeorbusinesswhichis carriedoutintheUK.UKtaxwillalsobechargedincaseswherelawsto preventtaxavoidanceprovidethattheincomeistobetreatedasbelonging toanotherperson. Ifyouholdsecuritieswithanominalvalueofmorethan5,000duringatax yearinwhichyouareresidentintheUKatanytime,specialtaxprovisions(the accruedincomescheme)willapplywhenthesecuritiesaretransferred.You willbechargedUKIncomeTaxontheinterestthathasbuiltup(accrued) overtheperiodyouownedthesecuritiesfollowingthelastinterestpayment, evenifyouwerenotresidentintheUKforpartofthatperiod.

10.13.3Interestfrombuildingsocietiesandbanks
Toreceiveyourinterest withoutUKtaxbeing deducted: askyourbank,building societyordeposittaker foradeclaration formR105 givethecompleted declarationtoyour bank,buildingsociety ordeposittaker declarationswillonly haveeffectfromthe dateyourbank, buildingsocietyor deposittakerreceives themtheycannotbe backdated iftheaccountisajoint accountyoucanonly completeadeclaration ifallofthepeoplewho arebeneficiallyentitled totheinterestarenot residentornot ordinarilyresident. Youcanfindmoredetails onDoubleTaxation Agreementsinpart9of thisguidance. Youcanfindmoredetails ontheremittance basisinpart5of thisguidance. Anexceptiontotherule ofUKincomebeing chargeableisFOTRA see10.13.2.

Mostbanks,buildingsocietiesandotherdeposittakersintheUKdeductUK taxfrominteresttheypayorcredittoyouraccount.Ifyouarenotordinarily residentintheUK,youmaybeabletoarrangetohaveyourinterestpaid withoutsuchtaxbeingdeducted.Whetheryoucandothiswilldependonthe termsandconditionsoftheaccountandwhetherornotyourbank,building societyordeposittakeroffersthisfacility.Whereitisavailableonanaccount youcompleteanotordinarilyresidentdeclarationforthebank,building societyordeposittaker(not HMRC)whichstatesthatyouwantyourinterest tobepaidorcreditedwithouttaxbeingdeducted. Ifyou(or,inthecaseofjointaccounts,anyofthepeoplewhoarebeneficially entitledtotheinterest)becomeresidentorordinarilyresidentintheUK,you musttellyourbank,buildingsocietyordeposittakerrightawaysothatthey canstarttodeducttaxfromtheinterestpaid.

10.14InvestmentincomewhenyoucometoorleavetheUK partwaythroughataxyear 10.14.1WhenyoubecomeresidentintheUK


WhenyoucometotheUKduringataxyearandareresidentfromthedate ofyourarrival,youareliabletoUKtaxonyourUKinvestmentincomefor thewholeofthetaxyear,subjecttothetermsofanyDTAwhichmightapply toyou. YouwillnotbeliabletoUKtaxonforeigninvestmentincomearisingbefore thedateofyourarrivalunderExtraStatutoryConcessionA11.Fromthedate ofyourarrivalintheUKyouwillbeliabletoUKtaxonyourforeign investmentincome,subjecttowhetheryouusetheremittancebasisoftaxation intheyearofyourarrival.

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10.14.2WhenyoustopbeingresidentintheUK
WhenyouleavetheUKduringataxyearandbecomenonresidenthereonthe dayafteryourdeparture,youwillbeliabletoUKtaxonyourUKinvestment incomeforthewholeoftheyear.
Anexceptiontotherule ofUKincomebeing chargeableisFOTRA see10.13.2.

IfyoumeettherequirementsofExtraStatutoryConcessionA11youwillnot beliabletoUKtaxonyourforeigninvestmentincomefollowingthedateof yourdeparture.UptothedateofyourdeparturefromtheUKyouwillbe liabletoUKtaxonyourforeigninvestmentincome,subjecttowhetheryouuse theremittancebasisinthetaxyearofyourdeparture.

10.14.3Whenyoudonotusetheremittancebasis
Ifyoudonotusetheremittancebasisintheyearofdepartureyouwill, whereyouareentitledtoapplyExtraStatutoryConcessionA11,beliableto UKtaxonyourforeigninvestmentincomewhicharosebeforeyourdeparture fromtheUK.

10.14.4Whenyouusetheremittancebasis
Ifyouusetheremittancebasisintheyearofdepartureyouwill,whereyou areentitledtoapplyExtraStatutoryConcessionA11,beliabletoUKtax onyourforeigninvestmentincomewhichyouremittedtotheUKbefore yourdeparture.

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10.15HowinvestmentincomeistaxedintheUK
YourUK domicile status YourUK residence status ArisingBasis (AB)or Remittance Basis(RB) claimed Investmentincome UK Government 'FOTRA' securities

FromaUK source

Froma nonUK source3

Domiciled withinthe UK

1Resident and ordinarily resident

AB

Liable

Liable

Not applicable2

2Resident andnot ordinarily resident

2(a)AB

Liable4

Liable

Notliable

2(b)RB

Liable4

Liableon remittance

Notliable

3Not resident

AB1

Liable

Notliable

Notliable

Domiciled outsidethe UK

4Resident and ordinarily resident

4(a)AB

Liable

Liable

Not applicable2

4(b)RB

Liable

Liableon remittance

Liable2

5Resident andnot ordinarily resident

5(a)AB

Liable4

Liable

Notliable

5(b)RB

Liable4

Liableon remittance

Notliable

6Not resident

AB1

Liable

Notliable

Notliable

Notes
Useofthistableissubjecttoanydifferenttreatmentprovidedforunderthetermsoftherelevant articleinaDoubleTaxationAgreementpart9providesinformationaboutpossiblereliefundera DoubleTaxationAgreement. 1 ForindividualsnotresidentintheUK,thearisingbasisislimitedtoliabilityonunearnedincome arisingintheUK. 2 UKGovernment'FOTRA'securitiesareonlyforthosepeoplewhoarenotresidentorarenot ordinarilyresidentintheUK.IfyouareresidentandordinarilyresidentintheUKyouwillbeliable toUKtaxoninterestfromFOTRAs,evenwhenyouaredomiciledoutsideoftheUK. 3 CertaintypesofinvestmentincomefromanonUKsourceisalsoknownas'relevantforeignincome'. 4 IfyouarenotordinarilyresidentintheUKyoumayapplytoreceiveinterestfromabankor buildingsocietywithouttaxdeductedbycompletingformR105(see10.13.3).

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11NationalInsurancecontributions(NICs)
Thetermsresident and ordinarilyresident donot havethesame meaningforNICsasthey dofortaxandsothetax rulesonresidenceand ordinarilyresidenceset outinparts2and3of thisguidancearenot relevanttoNICs. LeafletNI38Social Securityabroad gives guidanceontheruleson residenceandordinarily residencewhichapply forNationalInsurance purposes.Togetleaflet NI38SocialSecurity abroad goto www.hmrc.gov.uk/pdfs/ nico/ni38.pdf TheMemberStatesof theEuropeanUnionare listedat11.2.

MostpeoplewhoworkintheUKpayNationalInsurancecontributions(NICs) inadditiontopayingtax.Therearesixclassesofcontributions,someofwhich counttowardscertainSocialSecuritybenefits. WhenyouleavetheUKyoumightstillhavetocontinuepayingUKNICsand whenyoucometoliveintheUK,youmighthavetostartpayingthem. WhatNICsyoupaywilldependonwhether: youaregoingtoorcomingfromaEuropeanEconomicArea(EEA)country (includingSwitzerland),or youaregoingtoorcomingfromacountrywithwhichtheUKhasabilateral SocialSecurityAgreement,or youaregoingtoorcomingfromanotherforeigncountrywhichisnot withintheEEA(includingSwitzerland)andwhichdoesnothaveabilateral SocialSecurityAgreementwiththeUK.

11.1EuropeanEconomicArea(EEA)countries
TheEEAcountriesaretheMemberStatesoftheEuropeanUnionandIceland,
LiechtensteinandNorway.
SwitzerlandisnotamemberoftheEEAbutthereisanagreementbetween
SwitzerlandandtheEUwhichmeansthattheEUrulesonNationalInsurance
andSocialSecurityalsolargelycoverSwitzerland.

11.2EuropeanUnion(EU)countries
AtApril2010,aswellastheUK(includingGibraltarastheUKappliesthe ECRegulationstoGibraltarasthoughitisanotherEEAcountry,and otherEEAcountriestreatGibraltarasthoughitispartoftheUK),the MemberStatesoftheEuropeanUnionare:
Austria Belgium Bulgaria CzechRepublic Denmark Estonia Finland France Germany Greece Hungary Ireland Italy Latvia Lithuania Luxembourg Malta Netherlands Poland Portugal RepublicofCyprus Romania Slovakia Slovenia Spain Sweden

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11.3CountrieswithbilateralSocialSecurityAgreementsinforce withtheUK
AtApril2010,thefollowingcountrieshavebilateralSocialSecurity AgreementsinforcewiththeUKwhichcoverNICs.Someoftheseagreements includetheIsleofMan,GuernseyandJerseyaspartoftheUK.Wherethat isthecase,thebenefitsandobligationsoftheagreementwillalsoapplyto thosecountries:
Barbados Bermuda Canada(excludingQuebec) IsleofMan Israel Jamaica Japan2 Jersey/Guernsey Korea2 Mauritius Philippines Turkey USA TheRepublicsoftheformerYugoslavia1

1TheRepublicsoftheformerYugoslaviaThisandreferencesto'TheRepublic'meansthe RepublicsofBosniaHerzegovina,Croatia,Kosovo,theformerYugoslavRepublicofMacedonia, MontenegroandSerbia.SloveniaisaMemberStateoftheEUandistreatedinlinewithother EEAcountries. 2TheDoubleContributionsConvention(DCC)withtheRepublicofKoreaandJapanonlycover SocialSecuritycontributionliability.

11.4Ifyouaregoingabroad 11.4.1GoingabroadtoanEEAcountry
TheEEAcountriesare listedin11.1.

IfyouaregoingtoanotherEEAcountry,theEuropeanCommunitySocial SecurityRegulationsapply.Thegeneralruleisthatyouwillbesubjectto theSocialSecuritylegislationofthecountryinwhichyouworkbutthereare someexceptions. TheexceptionrulesthatapplywithintheEEAandSwitzerlanddependon whether: youareanEUnationalandtheothercountriesareEUmemberstates,or youareanonEUnationallegallyresidentinaMemberState,or theothercountriesinvolvedareIceland,Norway,Liechtenstein orSwitzerland.

ExceptionswhengoingabroadtoanEUcountry
IfyouareanEUnationalandaUKemployersendsyoutoworkinanotherEU countryforaperiodnotexpectedtobemorethan24monthsattheoutset,you andyourUKemployerwillusuallycontinuetopayUKNICsasifyouwere stillintheUK.YouremployerwillneedtoapplyonyourbehalftoNIC&EO InternationalCaseworkerforformA1.Thisformconfirmsthatyou willcontinuetopayUKNICswhileworkingintheothercountryandwill ensurethatyouarenotrequiredtocontributetotheothercountry'sSocial Securityscheme. SimilarrulesexistforemployeeswhoarenotEUnationalsbutwhoarelegally residentintheUKandforpeoplegoingtoIceland,Norway,Liechtensteinor Switzerland.WhereyouaresenttoworkinanotherMemberStateforaperiod notexpectedtobemorethan12monthsattheoutset,youandyouremployer willusuallycontinuetopayNICsasifyouwereintheUK.Youremployerwill needtoapplyonyourbehalftoNIC&EOInternationalCaseworkerforform E101.Iftheworklastslongerthanexpected,youcanapplyforformE102 whichwillallowyoutopayUKNICsandexemptsyoufromforeignsocial
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Youcanfindthe addressandphone numberofNIC&EO InternationalCaseworker inNewcastleinpart13 ContactingHMRC.

contributionsforamaximumofafurther12monthsthatyouareabroad.The otherMemberStatehastoagreewithHMRCtotheextensionforformE102 tobeissued.


TheEuropeanHealth InsuranceCard(EHIC) providesforhealthcare coverabroadforyouand anyfamilymemberswho accompanyyouforthe periodofyour employmentintheother country.Youcanapply onlineat www.ehic.org.uk orbyphoneon 08456062030. Applicationformsare alsoavailableatUK postoffices.

YouwillneedtoensurethatyouhaveavalidEHICtoprovidecoverfor healthcareforyouandanyofyourfamilywhoaccompanyyoufortheperiod ofemploymentintheothercountry. Similarrulesapplyifyouareselfemployed.YoumustcontactNIC&EO InternationalCaseworkerNewcastleandalsoensurethatyouobtainEHICsto providehealthcarecoverforyourselfandanyofyourfamilywhoaccompany youfortheperiodofselfemploymentintheothercountry. Therearedifferentrulesifyoubelongtooneofthefollowinggroups. Thosewhonormallyworkinmorethanonecountry. Seafarers(mariners). Transportworkers. Civilservants. Membersofthestaffofdiplomaticorconsularposts. Thosewhoworkforamemberofthestaffofadiplomaticorconsularpost. MembersofthestaffoftheEuropeanUnion. MembersofHerMajestysforces. CivilianswhoworkforHerMajestysforcesinGermany,orforan organisationlikeNAAFIwhichservesHerMajestysforces. Inmanyofthesecases,youmayhavetocontinuetopayUKNICs. IfyouworkinanotherEEAcountryinanyothercircumstances(forexample, foraforeignemployer)oryouintendtoremainabroadindefinitely,youwill probablyhavetopaySocialSecuritycontributionstotheothercountrys scheme.Ifso,youwillnotberequiredtopayUKNICs.Butitmightbe possibleforyoutopayUKvoluntaryNICstoprotectyourbasicUK pensionrights.

11.4.2Goingabroadtoacountrywhichhasabilateralagreement coveringNICswiththeUK
Thecountrieswithwhich theUKhasabilateral SocialSecurity AgreementcoveringNICs arelistedat11.3.

IfyouaregoingtoacountrywithwhichtheUKhasabilateralSocialSecurity AgreementcoveringNICs,thepositionwilldependonthetermsofthe particularagreement.Thegeneralruleisthatyouwillbesubjecttothe socialsecuritylegislationofthecountryinwhichyouworkbutthereare someexceptions.

Exceptionswhengoingabroadtoacountrywhichhasabilateral agreementcoveringNICswiththeUK
IfyouremployersendsyoutoacountrywithwhichtheUKhasanagreement, youmayberequiredtocontinuepayingUKNICsasifyouwerestillintheUK. HowlongyoucontinuetopayUKNICswilldependontheparticular agreement.YouremployerwillneedtoapplyonyourbehalftoNIC&EO InternationalCaseworkerNewcastleforacertificateconfirmingthatUKNICs continuetobepaidwhileyouareworkingintheothercountry.Thiswill ensurethatyouarenotrequiredtocontributetotheothercountrysSocial Securityscheme. UnliketheEEA,thereisnogeneralprovisionforhealthcareinmostbilateral agreements.Youoryouremployershouldconsideryourhealthcareprovisions whileworkinginsuchcountries. Someagreementsincludeprovisionswhichmayallowyoutocontinuepaying
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Youcanfindthe addressandphone numberofNIC&EO InternationalCaseworker inNewcastleinpart13 ContactingHMRC.

UKNICsforlongerthanthenormalperiodundertheagreement. Ifyouareselfemployed,notallagreementswillcoveryou.Inthecaseofthose thatdo,similarrulesapplyasforthoseinemployment. Certainagreementscontainspecialrulesforparticulargroups,suchascivil servants,marinersortransportworkers. IfyouworkinacountrywithwhichtheUKhasanagreementinanyother circumstances,forexample,foraforeignemployer,oryouintendtoremain abroadindefinitely,youwillprobablyhavetopaysocialsecuritycontributions totheothercountrysscheme.Ifso,youwillnotberequiredtopayUKNICs. ButitmightbepossibleforyoutopayUKvoluntaryNICstoprotectyourUK basicpensionrights.

11.4.3Goingabroadtoanothercountrywhichisnotwithinthe EEAanddoesnothaveabilateralagreementcoveringNICs withtheUK


IfyouaregoingtoacountrywhichisnotwithintheEEAanddoesnothavea bilateralSocialSecurityAgreementwiththeUK,thepositionwilldependon thedomesticrulesthere. IfyourUKemployersendsyoutoworkinacountryoutsidetheEEAandnot coveredbyabilateralagreement,youwillberequiredtocontinuepayingUK NICsforthefirst52weeksofemploymentintheothercountrywhereallof thefollowingconditionsapply. YouremployerhasaplaceofbusinessintheUK. YouareordinarilyresidentintheUK. YouwereresidentintheUKimmediatelybeforestartingtheworkabroad. NocertificateisrequiredtoconfirmthatyoucontinuetopayUKNICs. Somecountrieswillrequireyou,inadditiontoyourUKNICs,tocontributeto theirSocialSecurityscheme.After52weeksyouarenotrequiredtocontinue payingUKNICs,butyoumaypayvoluntaryNICstoprotectyourUKbasic pensionrights. ShouldyoudecidenottopayvoluntaryUKNICs,yourNationalInsurance recordwillstillbeprotectedforcertainSocialSecuritybenefits(butnotState Pensionorwidowsbenefit)onyourreturntotheUK.

11.5IfyouarearrivingintheUKfromabroad
Ifyouarriveherefromabroadandtakeupemploymentortakeup selfemployment,youwillgenerallyberequiredtopayUKNICsassoonasyou arriveandstartworkbuttherearesomeexceptionstothisrule.
TheEEAcountriesare listedat11.1.

11.5.1ArrivingintheUKfromanEEAcountry
IfyouareanEUnationalandanemployerinanotherEUcountrysendsyouto workintheUKforupto24months,youmaybeabletocontinuepaying SocialSecuritycontributionsintheothercountry,ratherthanintheUK.If formA1hasbeenissuedbytheforeignSocialSecurityinstitution,confirming thatyoucontinuetocontributetotheforeignscheme,youwillnothavetopay UKNICs.SimilarrulesexistfornationalsofIceland,Liechtenstein,Norway andSwitzerlandandnonEEAnationalsresidinginanEEAcountrywhoare senttotheUKtoworkforaperiodnotexpectedtoexceed12monthsand whohaveaformE101issuedbytheforeignSocialSecurityinstitution confirmingthatyouarecontinuingtocontributetotheforeignscheme.

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Therearesimilarprovisionsforselfemployedpeoplewhoareworking temporarilyintheUK.

11.5.2ArrivingintheUKfromacountrywithabilateralagreement
Thecountrieswithwhich theUKhasabilateral SocialSecurity AgreementcoveringNICs arelistedat11.3.

IfyouaresenttoworktemporarilyintheUKbyanemployerinacountry withwhichtheUKhasabilateralSocialSecurityAgreementcoveringNICs, youmaybeabletocontinuepayingforeignSocialSecuritycontributions.Ifa certificateisissuedbytheforeignSocialSecurityinstitution,confirmingthat youcontinuetocontributetotheforeignscheme,youwillnothavetopay UKNICs.

11.5.3ArrivingintheUKfromanothercountrywhichisnotwithin theEEAanddoesnothaveabilateralagreementcovering NICswiththeUK


IfyouarenotcoveredbythespecialrulesforpeoplecomingfromtheEEAor Switzerland,andnotcoveredbyabilateralSocialSecurityAgreement,youmay beexemptfromNationalInsuranceforupto52weeks,providingthatyou meetallofthefollowingcriteria. YouarenotordinarilyresidentintheUK. YounormallyworkoutsidetheUKforaforeignemployer. YouaresenttoworkintheUKforatimebythatforeignemployer WhenintheUKyouworkforthatemployer. UnderthisruleneitheryounoryouremployerhastopayUKNICsforthefirst 52weeksofyouremploymentintheUK.NICsarepayablefromthe53rd week.IfyoudonotmeetthesecriteriayouwillbeliabletopayNICsfromthe startofyouremploymentintheUK. IftheforeignemployerdoesnothaveaplaceofbusinessintheUKandyour employermakesyouavailabletoworkinanotherbusinessintheUK,NICsare duefromthatUKhostemployer.

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12Glossary
Glossaryofsomeofthetermsweuse
Thefollowingaresimpleexplanationsofsomeofthetermsusedinthis guidance.Thesewillhelpyoutounderstandsomebasicconcepts.Inmany casestheyaresupportedwithmoredetailedinformationelsewhereinthe guidance.Theyaresetoutalphabetically.

12.1Abroad/foreign
Youcanfinddetailson bilateralSocialSecurity Agreementsatpart11of thisguidance.

Inthisguidanceabroad andforeign refertoanycountryoutsidetheUK(see 12.24).TheChannelIslandsandtheIsleofManareabroad(exceptinthe limitedcontextofcertainbilateralSocialSecurityAgreements).Ifyouhave bankaccountsorinvestmentsintheChannelIslandsortheIsleofManthey areforeign orabroad fromtheUK(oftenreferredtoasoffshore).Ifyouare resident,domiciledandordinarilyresidentintheUK,youwillstillbeliableto UKtaxonanyinterestyoureceivefromsuchaccountsandinvestments.

12.2Accrue
Accrue isatermusedwhentalkingaboutcapitalgains(see12.4).Again accruesonanassetwhenitsincreaseinvalueduringtheperiodyouhave owneditisrealisedforCapitalGainsTaxpurposes.Youcanrealisethevalue ofanassetinanumberofwaysforCapitalGainsTaxpurposes.Forexample, byselling,exchangingorgivingawayanasset.

12.3Arisingbasis
ApersonwhoisresidentintheUKisnormallytaxedonthearisingbasis.This meansthattheywillpayUKtaxonalloftheirincomeasitarisesandontheir gainsastheyaccrue,whereverthatincomeandthosegainsareintheworld.
Analternativebasisof taxationforsomepeople withforeignincome and/orgainsiscalledthe remittancebasisand youcanfinddetailsof thisat12.20.

Whenyouaretaxedonforeignincomeand/orgainsonthearisingbasisyou mightfindthatyourforeignincome/gainshavealreadybeentaxedinthe countryinwhichtheyarelocated.Thatdoesnotmeanthattheyarenot taxableintheUK.Youmuststilldeclareall ofyourforeignincomeandgains. Inmanycases,reliefisgivenintheUKforforeigntaxpaidonforeignincome andgainsundertheprovisionsoftherelevantDoubleTaxationAgreements (see12.6)orviaunilateralrelief.EvenifnoUKtaxispayablebecauseitis coveredcompletelybytheforeigntaxyouhavepaidyoucanonlyclaim reliefunderaDoubleTaxationAgreementbycompletingaSelfAssessment taxreturn.

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12.4CapitalgainsandCapitalGainsTax
Youcanfindmore informationabout capitalgainsandCapital GainsTaxat www.hmrc.gov.uk

CapitalGainsTaxisataxontheprofitgainyoumakewhenyoudispose ofassets.Inthecontextofcapitalgains,disposeofmeanssell,exchangeor giveaway,anditalsoincludespartdisposalsandsomeothereventsinvolving assetswhichthelawsaysshallbetreatedasdisposals.Youdontpay CapitalGainsTaxonsomeassets,forexamplepersonalpossessionsworth 6,000orless,orinmostcases,yourmainhome. YouusuallyhavetoworkoutifthereisanyCapitalGainsTaxtopayifyou: sell,giveaway,exchange,orceasetoowndisposeofallorpartof anasset receiveacapitalsum,suchasaninsurancepayoutforadamaged,lostor destroyedasset. CommonitemsthatattractCapitalGainsTaxwhentheyaredisposed ofinclude: land
buildings,forexampleasecondhome
personalpossessionssuchasapaintingorjewelleryworthmorethan6,000
sharesorsecurities
businessassets,forexamplebusinesspremisesorgoodwill
foreigncurrencywhichyoubringtotheUKtospend
foreigncurrencywhichyoudisposeoftoacquireotherassets.
YoudonthavetopayCapitalGainsTaxwhenyousellpersonalbelongings
worth6,000orless,yourcarandinmostcasesyourmainhome.Other
thingsthatyoudonthavetopayCapitalGainsTaxoninclude:
ISAsorPEPs
UKgovernmentgilts
betting,lotteryorpoolswinnings
moneywhichformspartofyourincomeforIncomeTaxpurposes,for examplefrompropertytrading giftstocharities foreigncurrencyacquiredforpersonaluseoutsidetheUK.

Forinformationabout lossesonoverseasgains see5.6.

ThereisataxfreeallowancecalledtheAnnualExemptAmount (thetaxfree allowance)forCapitalGainsTax.Forthetaxyear201011thiswas10,100 foreveryindividual.Manypeopleusingtheremittancebasiswillnotbeableto claimthisAnnualExemptAmount becauseoftherulesforusingtheremittance basis(seepart5ofthisguidance).

12.5Domicile
Ifyoudohaveforeign incomeand/orgains,You canfindmore informationabout domicileatpart4ofthis guidance.Fordetailson howdomicilemight affectyourInheritance Taxpositiongoto www.hmrc.gov.uk/ inheritancetax/ index.htm

Yourdomicileiswhereyouhaveyourpermanenthome.Domicileisageneral lawconcept:itisnotdefinedintaxlaw.Yourdomicileisdistinctfromyour nationalityandfromyourplaceofresidence.YoucanberesidentintheUKbut haveadomicilesomewhereelse. YourdomicilestatusmattersforIncomeTaxandCapitalGainsTaxpurposesif youhaveincomeand/orcapitalgainsoutsidetheUK.Itisalsorelevantfor InheritanceTaxpurposes.

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12.6DoubleTaxationAgreements(DTAs)
Youcanfindmore informationonDouble TaxationAgreementsin part9ofthisguidance.

TheUKhasDoubleTaxationAgreements(DTAs)withmanycountriesaround theworld.ThemainpurposeofaDTAistopreventyouhavingtopaytaxin twocountriesonthesamesourceofincome.WhenyouareresidentintheUK andinacountrywithwhichtheUKhasaDTA,thatDTAwillprovide: specialrulesfordeterminingwhichofthecountriesisregardedasyour countryofresidenceforthepurposesoftheagreement(oftenreferredtoas treatyresidence),and detailsofanyexemptionsandreliefsfromUKtaxandtaxintheother countrygrantedundertheagreementtoresidentsofthatothercountry. ThecontentofeachDTAisdifferentasithasbeenagreedbetweentheUKand theindividualcountryinquestion.YoushouldalwaysensurethattheDTAyou lookatistheonedealingwiththecorrectcountry. WhereaDTAexistsbetweentheUKandanothercountry,itwillusuallyhave theeffectofreducingtheamountofforeigntaxthatyouhavetopay.To benefitfromthetermsofaDTAyoumustmakeaclaimorapplicationunder thetermsoftheagreement.

12.7Dualresident
Youcanfindmore informationondual residenceandonDouble TaxationAgreementsin part9ofthisguidance.

Othercountrieshavetheirownrulesaboutresidence.Itispossibletobe resident(orordinarilyresident)intheUKandresident(and/orordinarily resident)inanothercountryunderthatcountrysrules.Thismeansthatyouare dualresident (ordualordinarilyresident). Inmanycaseswhenyouaredualresident therewillbeaDoubleTaxation Agreement(DTA)(see12.6)betweentheUKandtheothercountry.TheDTA willcover,amongotherthings,therulesfordetermininginwhichcountryyou areresidentforthepurposesofthetreatyandwhattaxyouareduetopay where.TheDTAwillprovideotherinformationwhichmightaffectyou forexample,whatUKtaxallowancesyoucanreceive.

12.8Earnedincome
Forinformationabout investmentincome see12.11. Youcanfindmore informationonearned incomeandhowitis taxedintheUKinpart 10ofthisguidance.

Earnedincomeisany incomewhichispaidtoyouforsomethingthatyouhave doneworkyouhavecarriedout.Italsoincludespensionsfromfundsto whichyoucontributedwhenyouwereinemployment. Althoughthisisnotacompletelist,earnedincomeincludes: asalary,wageandanybonusesfromanemploymentforexample,your daily,weeklyormonthlypaymentfromanemployerorfromemployersif youhavemorethanoneemployment anypaymentsthatyoureceiveasadirectororofficeholder anypensionsincludingtheStatePension incomefromanytrade,professionorvocationforexampleyourearnings fromabusinessorpaymentsthatyoureceiveforsomethingyouhave producedsuchasapieceofwritingorapainting benefitsinkindprovidedbyreasonofanemployment. Dividendincomeisnot earnedincome.

12.9Foreign
Foreign meanssomethingfromoutsidetheUKseeAbroad (12.1).

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12.10IncomeTax
Taxableincome includes: earningsfrom employment(including benefitsinkindwhich youreceivefrom youremployer) earningsfrom selfemployment mostpensionsincome (State,companyand personalpensions) rentalincome incomepaidtoyou fromatrust interestpaidtoyou (byabank,building societyandsoon.) incomeyoureceive fromsharebased options. Nontaxableincome includes: certainbenefits incomefromtax exemptaccounts, forexampleISAs WorkingTaxCredit (WTC) PremiumBondwins.

UKIncomeTaxisataxonyourincome.Notallincomeistaxableandyouare taxedonlyonyourtaxableincome aboveacertainlevel.Therearereliefsand allowancesthatmayreduceyourIncomeTaxbillandinsomecases determinethatyouhavenotaxtopay(see12.17). WecollectIncomeTaxindifferentwaysdependingonthetypeofincomethat youhaveandwhetheryouareemployed,selfemployedornotworking. Theseinclude: PayAsYouEarn(PAYE) SelfAssessment taxdeductedatsourcewheretaxisdeductedfromsomebank/building societyinterestbeforetheinterestispaidtoyou oneoffpayments.
Ifyouareanemployee,youremployerwilldeducttaxfromyourearnings
throughPAYE.Ifyouareselfemployed,youwillberesponsibleforfillingina
SelfAssessmenttaxreturnandpayingyourowntax.
YoucouldalsobeliabletoIncomeTaxifyouareatrustee.Youcanfind guidanceontrusteesintheTrusts,SettlementsandEstatesManual at www.hmrc.gov.uk TheratesofIncomeTaxmaychangefromonetaxyeartoanother.Formore informationonthecurrentandpreviousyearsratesofIncomeTaxand moreinformationabouttaxableandnontaxableUKbenefits,goto www.hmrc.gov.uk

12.11Investmentincome
Forinformationabout earnedincomesee12.8. Youcanfindmore informationon investmentincomeand howitistaxedintheUK inpart10ofthis guidance.

Investmentincomeisanyincomethatisnotapensionandhasnotbeenearned byyouasanemployee,bycarryingoutyourprofessionorfromrunningyour ownbusiness.Inmostcasesinvestmentincomearisesfrominvestmentsyou havemade. Althoughthisisnotacompletelist,incomefromsavingsandinvestments includes: interestfrombankandbuildingsocietyaccounts dividendsonshares interestonstocks rentalincomewhichisreceivedbyyouandisnotpartoftheprofitsofa businesswhichyourun.

12.12NationalInsurancecontributions(NICs)
Youcanfindmore informationonNational Insurancecontributions inpart11of thisguidance.

Mostpeople(agedbetween16and65)whoworkintheUKpayNational Insurancecontributions(NICs).Therearesixclassesofcontributions,someof whichcounttowardscertainSocialSecuritybenefits.Youmaybeexemptfrom NICsifyoucontinuepayingSocialSecurityinyourhomecountryandare coveredbyaCertificateofCoveragefromthatcountry. AllpeoplewhoworkintheUKandpayNICsneedtohaveaNational Insurancenumber(NINO)whichisauniquenumberallocatedtoyousothata recordofyourNICscanbekeptandanybenefitsyouareentitledtocanbe calculated.NINOsarealsousedtouniquelyidentifyyouinthetaxsystem. Thetermsresident andordinarilyresident havedifferentmeaningsforNICs thanfortax.TheleafletNI38SocialSecurityabroad givesguidanceonthe rulesthatapplyforNationalInsurancepurposes.

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12.13Nonresident
Youcanfindmore informationonbeing residentintheUKin part2ofthisguidance.

IfyoudonotmeetthecriteriatoberesidentintheUKyouwillbe nonresident.IfyouarenotresidentintheUKyoumightnothavetopayUK taxonsomeofyourincomeandgains.Youcanfindmoredetailedinformation inpart10. IfyournormalhomeisoutsidetheUK,andyouareintheUKforfewerthan 183daysinthetaxyear,youmightbenonresident.Butyoumightstillbe residentevenifyouspendfewerthan183daysinataxyearintheUK(see 12.23).BeingresidentintheUKisnotsimplyaquestionofthenumberofdays youspendinthecountry.

12.14Offshore/overseas
Thetermsoffshore andoverseas refertoanywhereoutsidetheUK.(UKis explainedat12.24.)Inthiscontextoffshore andoverseas meanthesameas abroad (12.1)orforeign (12.9).Youmightseereferencestooffshorebank accounts andoffshoreincome. Offshoreissometimesusedinadifferentsensetodescribesomeworkersinthe oilandgasexplorationandexploitationindustries.Inthisusageitispossible tobeworkingoffshore fromtheUKbutstillbeworkingintheUKfor employmentincomepurposes.Thiswouldbethecasewhenapersonworksin theoilorgasindustryoutsideUKterritorialwaters,butwithinanyUK designatedareaofthecontinentalshelf(12.25).

12.15Ordinarilyresident/ordinaryresidence
Ordinaryresidence has particularimportance whenpeoplecometoor departfromtheUK. Guidanceonthese mattersisgivenin parts7and8. Yournotordinarily resident statusmight affecthowyouaretaxed intheUKonincome fromoutsidetheUK. Ifyouhaveforeign income,youcanfind moreinformationabout ordinaryresidenceat part3ofthisguidance.

Ordinaryresidence isdifferentfromresidence.Itisnotdefinedintaxlawand ourguidanceisbasedoncasesheardbythecourts.Ifyouareresidentinthe UKyearafteryear,thiswouldindicatethatyounormallylivehereandyou arethereforeordinarilyresident here. IfyouareresidenthereyourordinaryresidencepositionintheUKgenerally mattersonlyifyouhaveincomefromoutsidetheUK.Incomefromoutsidethe UKcanincludeearningsfordutiesperformedoutsidetheUK.

Residentandnotordinarilyresident
YoucanberesidentintheUKbutnotordinarilyresidenthere.Whenwetalk aboutsomeonebeingnotordinarilyresidentintheUKwemeanthatalthough theyareresidentintheUKforaparticulartaxyear,theynormallylive somewhereelse.Forexample,ifyouareresidentintheUKinataxyear becauseyouhavebeeninthecountryformorethan183daysbutyounormally liveoutsidetheUK,itislikelythatyouarenotordinarilyresident.

12.16Permanenthome
Youcanfindmore informationabout ordinaryresidencein part3,domicileinpart4 anddoubletaxationin part9ofthisguidance.

Permanenthomeisaconceptconsideredindecidingdomicilestatus.Itdoesnot refertooneparticularproperty.Generally,yourpermanenthomeisthecountry orstatewhereyoulive,orhavelived,andwhereyouintendtoremain,orto returntopermanently. Permanenthomehasadifferentmeaninginrelationtoordinaryresidenceand DoubleTaxationAgreements.

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12.17Personaltaxallowances
Youcanfindoutmore abouttheratesofUK personaltaxallowances andtaxratesat www.hmrc.gov.uk

IntheUK,personaltaxallowancesaretheamountsofincomewhichyoucan
earnduringataxyearbeforepayingIncomeTax(see12.10).Theseincludethe
basicPersonalAllowance,agerelatedallowances,BlindPersonsAllowanceand
taxreliefforcertainlifeassurancepremiums.Youmayalsobeentitledtoclaim
MarriedCouplesAllowanceifeitheryouoryourspouseorcivilpartnerwere
bornbefore6April1935.MarriedCouplesAllowancereducestheamountof
IncomeTaxthatyouhavetopay.
Thereisalsoataxfreeallowanceforcapitalgains(see12.4)whichiscalledthe
AnnualExemptAmount(AEA).

Youcanfindmore detailedinformation onpersonaltax allowancesatpart6of thisguidance.

Ifyouareanemployee,manyofyourpersonaltaxallowancesaregiveninthe
PAYEsystemthroughthetaxcodeoperatedonyourearningsbyyour
employer.Thereareformswhichyouremployershouldaskyoutocomplete
whichhelpusprovideyouwiththecorrectallowancesinyourcode.Ifyou
thinkthatyouarenotreceivingthecorrectallowancesinyourtaxcodeyou
cancontacttheofficewhichdealswithyourPAYE.
Ifyouareselfemployedyouwillclaimyourpersonaltaxallowancesby
completingaSelfAssessmenttaxreturn.
Youmightnotbeentitledtoreceivepersonalallowancesduringataxyearif
youhaveforeignincomeand/orcapitalgainsandyouareclaimingthe
remittancebasisoftaxation(see12.20).

12.18Relevantforeignincome
Youcanfindmore detailedinformationon typesofincome, includingincomefrom employmentandrelevant foreignincomeatpart10 ofthisguidance. Anexplanationofthe remittancebasisis providedat12.20and moredetailed informationisatpart5of thisguidance.

RelevantforeignincomeisincomefromasourceoutsidetheUKwhichisnot
incomefromyouremployment.
Althoughthisisnotacompletelist,relevantforeignincomewillinclude:
dividendsfromforeigncompanies theprofitsofaforeignpropertybusiness(rentalincome) theprofitsofatrade,professionorvocationwhichiscarriedoutwholly outsidetheUK pensionsandannuities interest royalties. Relevantforeignincomehasparticularimportanceforpeoplewhousethe remittancebasis.

12.19Relevantperson
Arelevantpersonissomeonewhoisconnectedtoyouinaspecificway.Itis relevantonlyforpeoplewhousetheremittancebasisandwhenconsideringthe remittanceofforeignincomeand/orgainstotheUK. Relevantpersonsinclude: yourspouseorcivilpartner acohabitee,thatisapersonwithwhomyouliveasaspouseorcivilpartner yourminorchildrenorminorgrandchildrenwhoareunder18yearsofage yourspousesorcivilpartnersorcohabiteesminorchildrenorminor grandchildrenwhoareunder18yearsofage trustees,whenyouoranotherrelevantpersonisabeneficiaryofthetrust closecompanieswhenyouoranotherrelevantpersonareparticipatorsinthe closecompany,forexampleasshareholders companywhichisa51%subsidiaryofsuchaclosecompany.

Aclosecompany includesaforeign companywhichwould beaclosecompanyifit wereresidentintheUK.

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12.20Remittancebasis
Youcanfindmore informationonthe remittancebasis,howto claimitandwhat happensifyouchoose toclaimitatpart5of thisguidance.

Theremittancebasisisanalternativetothearisingbasisoftaxationwhichis explainedat12.3.Youcanusetheremittancebasisoftaxationonlyifyouare residentintheUKduringataxyearand: notordinarilyresidentintheUK,or notdomiciledintheUK. Itisrelevantonlyifyouhaveforeignincomeand/orgainsduringataxyearin whichyouareresidentintheUK. WhenyouusetheremittancebasisyouwillpayUKtaxonyourUKsource incomeandgainsastheyariseoraccrue.ButyouhavetoaccountforUKtax onforeignincomeand/orgainsonlywhenyoubring(remit)themintotheUK. Ifyouareresidentbutnotdomiciled intheUK,youcanusetheremittance basisforbothforeignincomeandforeigncapitalgains. IfyouareresidentanddomiciledintheUKbutarenotordinarilyresident,you canonlyusetheremittancebasisforforeignincome.Theremittancebasisdoes notapplytoyourforeigncapitalgainswhichwillbetaxedonthearisingbasis. Evenifyouareeligibletousetheremittancebasis,itdoesnotmeanthatyou havetouseit.YoumightdecideinsteadtopayUKtaxonyourworldwide income(andgainsifyouarenotdomiciledintheUK)onthearisingbasisand claimrelieffromUKtaxforforeigntaxthatyouhavealsohadtopay (see 12.3). You may choose to do this rather than lose your personal allowances (see 12.17) as your tax bill could be higher on the remittance basis. If you decide to use the remittance basis, the impact of these special rules will
depend on your personal circumstances.
If you have less than 2,000 unremitted foreign income and/or gains which
arise or accrue in the relevant tax year you can use the remittance basis without
making a claim (see 5.5.1).

Ifyouhavebeenresident intheUKfornomore thansixofthelastnine taxyears;youhaveno UKincomeorgainsand donotremitanyincome orgainsfromoverseasin ataxyearyoucanalso usetheremittancebasis withoutmakingaclaim.

If you have 2,000 or more unremitted foreign income and/or gains


arising/accruing in the relevant tax year and you want to use the remittance
basis you must make a claim for that year. Your claim must be made by
completing the relevant boxes of a Self Assessment tax return (see 5.5.2). When
you make the claim you will lose your entitlement to UK personal tax
allowances and the Annual Exempt Amount for Capital Gains Tax (see 12.17).
Depending on your age and how long you have been resident in the UK you
might also be required to pay the Remittance Basis Charge (see 12.21).
If you have used the remittance basis in previous years and have remitted any
income and gains in the current year and/or if you are planning to use the
remittance basis this year, we would strongly advise you to look at the
additional guidance provided in the Residence, Domicile and Remittances
Manual on our website which provides more details.

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12.21RemittanceBasisCharge(RBC)
Youcanfindmore informationaboutthe RemittanceBasis Chargeinpart5of thisguidance.

Ifyouchoosetoclaimtheremittancebasisand,atanytimeintheyearofthe claim,youareaged18oroverandhavebeenUKresidentinatleastsevenof thepreviousninetaxyears,youwillhavetopaytheRemittanceBasisCharge (RBC)whenyouhave2,000ormoreunremittedforeignincomeand/orgains arising/accruinginthetaxyear. TheRBCisanannualchargeof30,000andistaxonyourunremittedforeign incomeand/orgains.YoupayRBCthroughtheSelfAssessmentsystem. IfyoupaytheRBCyouwillstillhavetopayUKtaxon: yourUKincomeandgains(andforeigngainsifyouaredomiciledintheUK butarenotordinarilyresident) anyforeignincomeandgainswhichyouremittotheUK.

12.22Remittedincomeandgains
Youcanfindmore informationonremitted incomeandgainsandon theremittancebasisin part5ofthisguidance. Anexplanationofa relevantpersonisalso foundat12.19.

ThistermisrelevantonlyifyouareaUKresidentusingtheremittancebasis (see12.20).WhenyouhaveincomeandgainsoutsidetheUKwerefertothem asforeignincomeandgains.Ifyouaretaxedonthearisingbasis(see12.3)you willpayUKtaxonallofyourforeignincomeandgains,wherevertheyarein theworld.But,ifyouareusingtheremittancebasis,youwillpayUKtaxonly onyourforeignincome(andgainsifyouarenotdomiciledintheUK)when youoranotherrelevantpersonbringsthemremitsthemtotheUK. Generally,foreignincomeandgainsareremittediftheyarebroughtinto, receivedorusedintheUKinanyway,includingintheformofmoneyorassets whichyouhavepurchasedfromyourforeignincomeorgains. Therearedetailedruleswhichsetoutwhatincomeandgainsareremitted, especiallyfromfundscontainingamixtureofsources.Youwillneedtostudy theguidancecarefullytoensurethatyouhavecorrectlyidentifiedwhatyou haveremittedtotheUK.

12.23Resident
Youcanfindmore informationaboutUK residenceinpart2of thisguidance. Moreinformation relevanttopeoplewhen theyfirstarriveinor whentheyleavetheUK canbefoundin2.4of thisguidance.

Thenumberofdaysyouarepresentinthecountryisonlyoneofthefactorsto takeintoaccountwhendecidingyourresidenceposition. IfyouareintheUKfor183daysormoreinthetaxyear,youwillalwaysbe residenthere.Therearenoexceptionstothis.Youcountthetotalnumberof daysyouspendintheUKitdoesnotmatterifyoucomeandgoseveraltimes duringtheyearorifyouarehereforonestayof183daysormore.Ifyouare hereforfewerthan183days,youmightstillberesidentfortheyear. Youshouldalwayslookatthepatternofyourlifestylewhendecidingwhether youareresidentintheUK.Thingsyoushouldconsiderwouldincludewhat connectionsyouhavetotheUKsuchasfamily,property,businessandsocial connections.JustbecauseyouleavetheUKtoliveorworkabroaddoesnot necessarilyprovethatyouarenolongerresidenthereif,forexample,youkeep connectionsintheUKsuchasproperty,economicinterests,available accommodationandsocialactivities. Forexample,ifyouaresomeonewhocomestotheUKona regularbasisand have a lifestyle pattern connecting you to this country, you are likely to be resident here.

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12.24UnitedKingdom(UK)
TheUKcomprisesEngland,Wales,ScotlandandNorthernIreland,including
theterritorialsea(thatis,waterswithin12nauticalmilesoftheshore).
UKairspaceisalsopartoftheUK.
TheIsleofManandtheChannelIslandsarenotpartoftheUK.

12.25UKcontinentalshelf
TheUKsectorofthecontinentalshelfismadeupofthoseareasoftheseabed andsubsoilbeyondtheterritorialseaoverwhichtheUKexercisessovereign rightsofexplorationandexploitationofnaturalresources.Theexactlimitsof theUKcontinentalshelfaresetoutinordersmadeundersection1(7)ofthe ContinentalShelfAct1964. EarningsinrespectofdutiesperformedintheUKsectorofthecontinentalshelf aretaxedinthesamewayasthosefordutiesperformedintheUK.

12.26UKtaxyear
Thetaxyear201011 runsfrom6April2010 to5April2011.

AUKtaxyearisnotacalendaryear.Itisthe12monthsstartingwith 6Aprilinoneyearandendingwith5Aprilthefollowingyear.

12.27Unremittableincome
Unremittableincome shouldnotbeconfusedwithunremitted foreignincome andgainswhichisrelevantonlyifyouusetheremittancebasis. Havingunremittableincomeisrelevanttoyourtaxaffairsonlyifyouusethe arisingbasis.Unremittableincomeisforeignincomewhichyouarenotableto bringintotheUK(remit)becauseofexchangecontrols,otherGovernment executiveaction,orashortageofforeigncurrencyintheforeigncountry.Ifyou haveunremittableincomeinataxyear,youmightbeentitledtoreliefsinyour UKtaxassessmentaswewouldnottaxyouonincometowhichyoucannot gainaccess.

12.28Unremittedforeignincomeandgains
Formoreinformationon theremittancebasisof taxation,seepart5of thisguidance.

ThistermisrelevantonlyifyouareaUKresidentusingtheremittancebasisof taxation(see12.20).Itrelatestoanyforeignincome(andforeigngainsifyou arenotdomiciledintheUK)whicharises(oraccrues)duringthetaxyearand whichyoudonotbringremittotheUKbutremainsabroad.Theamount offoreignincomeandgainsthatareunremittedattheendofataxyearis particularlyimportantindetermininghowthespecialremittancebasisrules applytoyou.

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13ContactingHMRC
YoucanfinddetailsofyourlocalofficeinThePhoneBook under
HMRevenue&Customsandatwww.hmrc.gov.uk underContactus.
Inanumberofplacesinthisguidancewerefertomatterswhicharedealtwith
byspecialistofficesofHMRevenue&Customs.Theseofficesandtheir
addressesareasfollows.

SpecialistPersonalTax FortheNonResidentLandlordScheme PersonalTaxInternational StJohnsHouse MertonRoad LIVERPOOL England L751BB Phone FromUK 01514726208 01514726209 Fromabroad +441514726208 +441514726209 Fornonresidententertainersand sportspersons PersonalTaxInternational ForeignEntertainersUnit StJohnsHouse MertonRoad LIVERPOOL England L751BB Phone FromUK 01514726488 Fromabroad +441514726488 ForpeoplesecondedintotheUKbya foreigncompany(incomingexpatriates) PersonalTaxInternational 3rdFloorWest TrinityBridgeHouse 2DearmansPlace SALFORD England M35BG Phone FromUK 01612613398 Fromabroad +441612613398

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NationalInsuranceContributionsandEmployerOfficeNewcastle ForinformationonUKNationalInsurance contributions NationalInsuranceContributions& EmployerOffice InternationalCaseworker BentonParkView NEWCASTLEUPONTYNE England NE981ZZ Phone FromUK 08459154811 Fromabroad +441912254811 email:viaourwebsiteat www.hmrc.gov.uk/cnr/email.htm SouthWalesArea Formerchantnavyseafarers SouthWalesArea,Cardiff(Compliance) MarineGroup15East TyGlas Llanishen CARDIFF Wales CF145FP Phone FromUK 08453003949 Fromabroad +441619319070 email:viaourwebsiteat www.hmrc.gov.uk/cnr/email.htm

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Thesenotesareforguidanceonlyandreflectthepositionatthetimeofwriting. Theydonotaffecttherightofappeal.Anysubsequentamendmentstothese notescanbefoundatwww.hmrc.gov.uk CustomerInformationTeam October2011Crowncopyright2011


HMRC10/11