International insights

When an individual comes to the UK, their tax residence status in the UK is decided by the UK’s Statutory Residence Test (SRT). See the full details in our Statutory Residence Test article.

However, many other countries have different rules as to what will make an individual tax resident. Being a tax resident in the UK does not mean you are not tax resident in another jurisdiction. As a result, it is possible to be resident in the two (or more) countries at the same time.  This is known as dual residence and an individual may be subject to tax twice on the same income and gains.

To prevent this, double tax treaties have been signed with a number of countries to eliminate this issue and the residence will be decided under the terms of the treaty.

Tie-breaker rules, which are included in tax-treaties, help determine which country has the right to tax an individual on particular sources of income or gains. Most treaties will decide where to tie-break based on:

• the country in which you have a home
• if there is a home in both countries (or neither), then consideration is given to where “centre of vital interests” is located - this a subjective test and many factors would need to be considered in order to assess which country is the centre of vital interests
• if the centre of vital interests cannot be determined then consideration is given to habitual residence, which is where the individual spends most of their time
• If the habitual residence cannot be determined then it is up to HMRC to decide this with the other tax authority.

Determining this will allow you to claim relief under the treaty so you are paying the right amount of tax.

We can work with your existing advisers or with our colleagues in the Crowe Global network to provide coordinated advice, balancing tax efficiency with your personal and business requirements.

Buying a property in the UK can seem a little daunting if you are a non-resident as there are a number of complex tax issues you will need to consider.

Firstly, deciding the ownership of the property is important to both to meet your objectives and to minimise your tax exposure. Typically, residential property can be owned by either:

• a company
• a Trust
• or personally.

Determining how the property is going to be used is significant from a tax standpoint as it could affect lots of different taxes and how much you may have to pay including:

• Stamp Duty Land Tax (SDLT) - if bought as a non-resident then a surcharge may arise (this may be reclaimable).
• Annual Tax on Enveloped Dwellings (ATED) - this only applies to properties owned by companies and can be a significant amount of tax if the property is not used for a relievable purpose such as commercial letting.
• Taxes on the rental income which would either be Corporation Tax and Income Tax - these taxes are charged at different rates
• Allowable deductions from expenses such as loan interest - if the property is held personally then there may be a restriction on the interest costs.
• Capital Gains Tax (CGT) – this applies to sales of UK property held by a non-resident.
• CGT reliefs such as Private Residence Relief (PRR) - if the property is your main home then it may not be chargeable to CGT, however non-residents will need to stay in the property for at least 90 nights in order to qualify for this relief.
• Inheritance Tax (IHT) is charged on UK situate property or residential property held within a Trust or corporate structure. It can be possible to reduce this exposure with debt on the property which reduces the net value subject to IHT..

How you decide to own your property depends on your individual circumstances so it is important to seek professional advice.

At Crowe we understand that plans can and do change and the costs of getting it wrong could be quite large. We can work with your existing advisors or with our colleagues in the Crowe Global network to provide coordinated advice, balancing tax efficiency with your personal and business requirements.

View our checklist of things to think about before your move

If you are thinking about moving to the UK it is important that you seek advice early, to allow time for planning; not only in advance of your arrival in the UK but also your departure from your current home country.  

We have put together a checklist of some of the key questions you need to think about before making your move

• Do you understand the tax implications of coming to the UK?
• When do you expect to arrive in the UK? The timing of the commencement of your UK residence by reference to the UK’s Statutory Residence Test and cessation of residence in the country you are leaving are crucial in determining your tax liabilities.
• Where are you domiciled? Are you able to take advantage of the favourable remittance basis regime that applies to the non-UK income and capital gains of 'non-doms'?
• What pre-arrival planning opportunities are available to you?
• How best to structure your investments and business interests for international tax efficiency?
• Are you intending to buy residential property in the UK? If so, you will need to decide the most appropriate structure in which to acquire the property.
• If you receive income or capital gains outside the UK, do you understand the application of the relevant tax treaties and how to claim relief from double taxation?
• Will you be exposed to UK Inheritance Tax and can you plan to mitigate this?
• What are the deadlines to register with the UK tax authorities, file UK tax returns and pay any taxes due?

We can work with your existing advisors or with our colleagues in the Crowe Global network to provide coordinated advice, balancing tax efficiency with your personal and business requirements.