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Discussion Starter · #1 ·
Hello,

I moved to the UK one year back in April 2014. When I started staying in the UK, I was unsure of my plans. So i continued to work remotely with an overseas company. Till end of financial year, I have stayed for more than 183 days in the UK, which makes me a resident. My tax deductions happened in my original country because I was still employed with them. I am unsure about:

1. Should I be filing returns in the UK?
2. Because I was genuinely unsure about my plans, should I say that my domicile was non-UK?
3. What possible implications can it have on Visa extension after 33 months?

I would like to follow the correct rules but its complicated. Please help me.

Nikesh
 

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Hello, I moved to the UK one year back in April 2014. When I started staying in the UK, I was unsure of my plans. So i continued to work remotely with an overseas company. Till end of financial year, I have stayed for more than 183 days in the UK, which makes me a resident. My tax deductions happened in my original country because I was still employed with them. I am unsure about: 1. Should I be filing returns in the UK? 2. Because I was genuinely unsure about my plans, should I say that my domicile was non-UK? 3. What possible implications can it have on Visa extension after 33 months? I would like to follow the correct rules but its complicated. Please help me.
#1 Yes.
#2 Domicile has nothing to do with it. It's your tax status that matters, as you are clearly tax-resident here.
#3 Not directly. Presumably your UK partner is meeting the financial requirement.
 

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Discussion Starter · #3 ·
Thank you for the prompt response as always Joppa!

So as I understand, I wanted to get quick advice if:

1. Should I file returns in UK showing my foreign income which has already been taxed? So I will have to then pay tax on foreign income and claim refund in India?
OR
2. Should I file returns in the UK and pay tax on only the amount which was remitted there which is a small amount and let the other taxes remain paid in India only?

P.S: This financial year onward I have moved to a contract and will be remitted the amount here and therefore it will become much more cleaner for me.

Please advice
Nikesh
 

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You ask for tax return form and complete it, declaring all your foreign income and foreign tax paid. If you have any UK tax due, you pay that. As there is double tax treaty between the two countries, you won't be taxed twice - only on the difference. So for example, if you paid £1,000 tax in India but your UK tax liability is £1,500 (if you had earned that amount in UK), you pay the difference of £500 to HMRC. As taxation of foreign income can get quite complicated with various rules, I suggest you get the help of an tax accountant familiar with both sets of tax laws - there are several in UK.
Unless you wish to use your non-UK-domicile status, you will be taxed on your world-wide income. You can opt for non-domicile status and it won't cost you anything until you have lived in UK for 7 years out of the last ten (then £30,000 annual charge applies) and you only pay UK tax on the money you have actually brought into UK (remittance basis). Seek professional advice as it can be complicated. But if you do, you forfeit your £10,600 annual personal allowance and £11,100 annual capital gains tax exemption and there are complicated rules for inheritance tax. Again seek professional advice.
 

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You ask for tax return form and complete it, declaring all your foreign income and foreign tax paid. If you have any UK tax due, you pay that. As there is double tax treaty between the two countries, you won't be taxed twice - only on the difference. So for example, if you paid £1,000 tax in India but your UK tax liability is £1,500 (if you had earned that amount in UK), you pay the difference of £500 to HMRC. As taxation of foreign income can get quite complicated with various rules, I suggest you get the help of an tax accountant familiar with both sets of tax laws - there are several in UK. Unless you wish to use your non-UK-domicile status, you will be taxed on your world-wide income. You can opt for non-domicile status and it won't cost you anything until you have lived in UK for 7 years out of the last ten (then £30,000 annual charge applies) and you only pay UK tax on the money you have actually brought into UK (remittance basis). Seek professional advice as it can be complicated. But if you do, you forfeit your £10,600 annual personal allowance and £11,100 annual capital gains tax exemption and there are complicated rules for inheritance tax. Again seek professional advice.
This is helpful Joppa and I would like to ask you a question on the same topic but should I start another thread to do so?
 

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But before you go ahead, I'm not a financial advisor and non-dom issue is very complicated so you should seek professional advice. And remember Ed Miliband has declared war on non-doms.
 

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But before you go ahead, I'm not a financial advisor and non-dom issue is very complicated so you should seek professional advice. And remember Ed Miliband has declared war on non-doms.
True and we may have to get professional advice but can I try you? You are so knowledgable!
 

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Go ahead then. But talk to a professional before you do anything.
Will do! We have been submitting our tax returns for many years ( I took them over myself some years ago) as, although we were non resident, we had income from property and small amounts of interest from bank accounts in the UK. Now, we are resident but my husband is still Non Dom as he would not change that until he has ILR. So we will be be submitting our tax returns this year as residents. The only difference is that we have pensions which we transfer to our UK account from the Bahamas and have already downloaded the Foreign Income Pages so we can add that to our compilations. We have no other income in the Bahamas or anywhere else apart from the UK. The Bahamas has no income tax so we have not already been taxed on our incoming pensions.

My main question is that you mention that a Non Dom resident loses the personal allowance, or have I misunderstood that? I agree with Ed Miliband's intention to do away with the Non Dom status! Maybe he would like to offer my husband immediate ILR!!
 

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Yes, if you declare non-dom status, you cannot claim personal allowance of £10,600 (for 2015-16) and all your UK income will be taxed.
 
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