UK tax guide by Dixon Wilson
Introduction to the British tax system
Long term UK residents, generally pay tax on their worldwide income and gains. Income tax is charged at progressive rates up to 45%; capital gains tax at 18%, 20% and 28%. If you are not UK domiciled, certain non-UK income and gains can be kept outside the UK tax net. This may require an annual payment of a remittance charge of up to £60k a year, depending on the number of years resident. The UK tax year runs to 5 April. Tax returns must be filed by the following 31 January. Tax is payable 31 January and 31 July. There is no wealth tax, but inheritance tax is 40% on death for those domiciled or with property in the UK.
Advice to the new comer
Residence and domicile are key concepts in determining exposure to UK tax. Residence for tax purposes has, since 6 April 2013, been determined by the UK’s Statutory Residence Test, which affords the opportunity for mitigating exposure to UK tax by judicious pre-arrival planning. Non-UK domiciliaries can pave the way for considerable tax savings by setting up structured offshore accounts segregating income, capital gains and capital. They can also protect their non-UK situs assets from inheritance tax by the use of excluded property trusts. If you are coming to the UK to do business, some thought should be given to the most tax-efficient way to structure it, be that as a sole trader or through a company or partnership. These are all complex areas and the best advice would probably, therefore, be to seek early professional advice with a view to optimising your tax position in the UK!