The United Kingdom: Residence For Individuals
Many individuals, for various reasons, wish to become resident in a new jurisdiction. They may wish to leave their former country of residence for a period before returning and such a period of absence may provide significant tax planning opportunities to shelter assets on a long term basis.
The United Kingdom is a jurisdiction where residence may be obtained fairly easily, particularly for European Union and Swiss citizens. The United Kingdom, and London in particular, is often thought to be an attractive place to live with its moderate climate, excellent communications and services and sophisticated lifestyle. From a fiscal aspect, the United Kingdom also offers an excellent image in front of scrutiny from other jurisdictions.
The United Kingdom tax liability of individuals wishing to obtain residence for a relatively short period may be comparatively low. Such persons are not likely to be domiciled in the United Kingdom and may only become ordinarily resident should they remain in the United Kingdom for over three years, show an intention to stay in the United Kingdom for over three years, or own accommodation in the United Kingdom. During the first seven years or parts thereof, provided that they remain non-domiciled, they should only be taxed in the United Kingdom on income and capital gains remitted to or arising in the United Kingdom .
After that time, if they elect to pay an additional amount per annum, they may continue to be taxed on the same basis. If they do not then it is likely that they will be taxed on a worldwide income and gains on an arising basis.
However, if they remain non-domiciled then inheritance tax should only be payable on non-UK situs assets for the first 17 years of residence or part thereof.
The use of offshore trusts may be of benefit in shielding overseas capital gains from taxation and for inheritance tax purposes in respect of non UK-situs assets.
The changes enacted by the 2008 Finance Act materially affected the manner in which individuals who are non-domiciled are taxed and the above only represents a very brief summary of our understanding of the position.
Individuals would need to take advice and any structuring is likely to depend very much upon their own circumstances. We are able to work with UK advisors in order to assist in providing appropriate and effective solutions.