Tax & Accounting News

Achieving non-residency

19/04/2010

For some individuals, leaving the UK either for work or retirement may be an attractive option, but achieving ‘non residence’ status requires a complete break from the UK and a number of major lifestyle changes, not all of which will be suitable for everyone.

Any move needs to be planned carefully from a tax perspective, as well as taking care of more practical matters including accommodation removals and visa or work permit requirements on the ground.

To gain non-residence status, anyone moving abroad to work needs to leave on a full-time contract of at least two years, covering at least one complete tax year. Return trips to the UK should not exceed 90 days, although it should be understood that the 90-day limit is not definitive; the key point is to show the individual concerned has really cut their ties with the UK, so it may be advisable to ensure the total number of days is significantly below this figure. In all cases, HM Revenue and Customs (HMRC) will need convincing that the overseas employment is genuine and if so, provided the other rules are satisfied, it should be possible to obtain non-resident status.

For people moving abroad for other reasons, it may be more difficult to convince HMRC that a clear break with the UK has been made. The recent case of Robert Gaines-Cooper, who was ruled to be UK resident despite living in the Seychelles and keeping his visits to the UK below 90 days, showed the importance of keeping ties to the UK to a minimum, since Mr Gaines-Cooper suffered from owning a house, where his wife and son continued to live, and a collection of classic cars in the UK. This proved that while the 90 day rule is important, it is not the only consideration.

Popular tax havens including the Isle of Man, Channel Islands, Switzerland and Monaco all have local taxes of varying levels, but most allow outsiders to cap their tax liability. Switzerland, for example, allows foreigners to pay tax on their property rather than their income, provided the person concerned is not gainfully employed in the country.

For more information please contact us.

 

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