If an international consultant is coming to the UK from abroad to provide services and/or work then the transverse of what has already been mentioned for UK ordinary residents working abroad will apply in that it may – depending on nationality – be possible to extricate themselves from their primary fiscal residence and work around different countries using a suitable company before intricating themselves back into their original place of ordinary fiscal residence. In the case of the UK, the fiscal year for self-employed consultants starts on the 6th of the next calendar year, which often provides – subject to applicable tax treaties – a honeymoon period for non UK based consultants.
What if I decide to base myself as a non-UK domiciled person in the UK but still have work outside the UK?
If you become ordinarily resident in the UK but are non UK domiciled then – subject to various anti-avoidance provisions and having taken advice - it could well be the case that you could set up an external company to carry out all your non-UK consultancy work and thus control UK taxable remittances to the amount you actually need to live in the UK rather than pay taxes on all your worldwide income. Of course, if you have substantial assets before coming to the UK then – again subject to advice – it could well be possible to protect these from UK taxes even if the UK becomes your place of permanent residence. However, if this is the case then it is recommended that expert advice is sought as recent Budgets have made significant changes to the traditional tax benefits available to non-domiciled but ordinarily resident individuals – Please see the UK Domicile & Residence above for more details.
General Tax Incentives
Compared with many other European countries the UK has a very pro-business environment meaning that domestic tax planning incentives must not be forgotten especially if a consultant builds up a substantial business in the UK and wishes to sell it in the future under the Entrepreneurs’ Relief Scheme. Under this Scheme Capital Gains Tax (CGT) can be avoided on the disposal of a UK qualifying business where assets are disposed of on or after 6 April 2008, as long as you have met the qualifying conditions throughout a one-year qualifying period either up to the date of disposal or the date the business ceased.
Qualifying capital gains for each individual are subject to a lifetime limit as follows:
- for disposals on or after 6 April 2008 to 5 April 2010, £1 million
- for disposals on or after 6 April 2010 to 22 June 2010, £2 million
- for disposals on or after 23 June 2010 to 5 April 2011, £5 million, and
- for disposals on or after 6 April 2011, £10 million. of April and ends on the 5th
Who can claim relief?
Entrepreneurs’ Relief is available to individuals and some trustees of settlements, but it is not available to companies or personal representatives of deceased persons or in relation to a trust where the entire trust is a discretionary settlement
The UK as a Tax Haven
Although denied by the UK government, there is little doubt that the UK is a very attractive and ‘safe’ fiscal location for non-domiciled individuals to live and in many ways is a far better prospect than living in a tax free location such as the Bahamas or Monaco. Why? Simply because unlike a tax haven the UK enjoys full tax treaty protection and helps a non-domiciled person protect themselves from their original countries anti-avoidance provisions many of which having reverse burdens of proof and extrication taxes for those who try and leave and take up residence in a tax haven. However, in the case of the UK the very fact that there are many genuine business, social and economic attractions and that local taxes apply – albeit not evenly – mean that in most cases little can be done by original ‘home’ countries to penalise wealthy and/or successful non-domiciled individuals. For anyone who doubts this, all they need to do is take a trip to the wealthiest parts of London where over 70% of all residents are wealthy non-nationals.
For more information on these benefits please contact one of our tax planning consultants.