cavortingcheetah

There've been discussions on PPRuNe in the past about residence and domicile in Britain. Most of the time the arguments have shown that not as many people know as much about tax as they think they do. It's complex and to make it harder the Treasury issued two consultations today. One is on non domiciles in the UK which will probably not affect many pilots.

http://www.hm-treasury.gov.uk/d/cons...ndividuals.pdf

But the other document relates to residence in the UK and quite possibly might be of interest to some, especially ex pat pilots.

http://www.hm-treasury.gov.uk/d/cons..._residence.pdf

The consultation is open until some time in September and the intention is to incorporate the new statutes in the April 2012 budget. The documents are not designed to facilitate those leaving Britain to find work abroad so much as to trap those abroad into coming to Britain and making it difficult for them to leave the clutches of the tax man once they're snared.
Tax consultants are already, well, making their comments.

International Adviser :: HM Treasury issues long-awaited tax residency and non-dom tax consultations

Some pilots might want to have a chat with their accountants or perhaps find one?

Flap 5

The first document is 31 pages long. The second document is 37 pages long. And they wonder why so few people know about or understand these rules?

There have already been changes recently which have changed the position of non domiciled people living in the UK. In the past if you were resident here but not domiciled here you paid tax on all your UK earnings but not on any foreign earnings. That has now changed. Now if you are resident but non domiciled you have to pay tax on both your UK and overseas earnings.

For example: We have a house overseas. If I had sold that house before this had changed I would have to pay CGT but my wife (non domiciled in the UK) would not. Now we are both liable for CGT on the sale of the house. She is also liable for the tax on the rental income from the house. Her domicile status has not changed. It is complicated and the liability also seems to be dependent on whether the money is remitted to the UK. Presumably, therefore, if the money is left overseas a non domiciled person would not have to pay tax on it in the UK. Even my tax accountant was caught out by that change.

That change has already happened around the time that CGT changed from 18% to 28% last year. The changes already in place can be viewed here:

HM Revenue & Customs: International series