UK Tax residency issues and cross border working

As Tax Manager in our Abingdon office Tom deals with a wide range of residency related issues and shares his thoughts on residency and related coronavirus events here.

The basic premise of taxation in the UK is that if you are a UK resident, you are taxed on your worldwide income and gains as they arise. Although some UK resident individuals who have their permanent home (‘domicile’) outside of the UK have the ability to be taxed on income and gains only when they are remitted to the UK (‘the remittance basis’). The remittance basis of taxation is complex and specialist advice should be sought if you fall within these rules.

An individual’s tax residency position in the UK is considered by reference to the Statutory Residence Test (SRT), which has been with us since 2013. The legislation is actually a series of tests to determine an individual’s UK residency position. The rules can be complex and require careful consideration. Getting things wrong can be costly, particularly where low or no tax jurisdictions form part of the equation.

The extraordinary events we have seen in the UK in recent weeks and across the globe generally, may put previous good tax planning at risk. Unfortunately, people may have contracts terminated, be forced to return the UK early or indeed may need to remain overseas for a period of time (whilst working or not). This could result in offshore income or gains inadvertently now being liable to UK taxes, creating an unwelcome tax bill. If you find yourself in this position, all may not be lost, and it is important to consider all available options.

If you would like advice on the above or other matters relating to your UK tax status or international taxation, then please contact Tom in our Abingdon office or any of our experienced tax teams in the office most convenient to you and we will be happy to assist you.