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Non-domiciled Residents

updated
February 16, 2021
Published on:
February 16, 2021

Q. If I am resident but not domiciled in the UK, what income tax will I be subject to?

For individuals who are not domiciled in the UK (i.e. do not have their permanent home in the UK) the rule can be modified so that their non-UK income is taxed in the UK on the ‘remittance basis’. 

This means that you only pay UK tax on the income or gains you bring to the UK. Non-UK domiciled individuals who are being taxed on this basis will not have the benefit of the personal allowance nor the annual exempt amount for capital gains tax purposes (see below).

Once an individual has been resident for more than seven of the previous nine years, an annual remittance basis charge will apply, starting from £30,000 per annum. 

Anyone who has been resident in the UK for 15 or more out of the previous 20 tax years will be deemed to be UK domiciled for Income Tax, Capital Gains Tax and Inheritance Tax purposes.

Income tax allowances and rates

UK residents and certain non-residents are entitled to personal allowances, although these are restricted/removed for income above £100,000.

The personal allowance is deducted from taxable income before the tax charge is calculated. The standard personal allowance is £12,500, and the rates vary between 20% and 45%.

Capital Gains Tax (CGT)

For non-resident individuals, there is generally no CGT liability. The one exception to this is for the disposal of UK residential property. HMRC must be notified of the sale within 30 days of completion through the submission of a tax return.

CGT is a tax on the profit when an asset that has increased in value is sold. This applies to assets used by a UK branch or agency. For residents, CGT starts at a basic rate of 10%, rising to 28%.

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