Resident in the UK

Who has to pay UK tax?

Very broadly; persons including individuals companies and trusts resident in the UK are generally taxable on their worldwide income.

Resident in the UK

A person will be treated as resident:-

• if they are physically present for 183 days in any tax year from 5th April,
• they are treated as regular visitors to the UK staying for 91 days or more each year for the last four years or
• they come to work in the UK with the intention of staying two or more years.
  

Companies

A company will generally be treated as resident if:-

• it is UK incorporated, or
• it is managed and controlled in the UK, meaning either that the meetings of directors take place in the UK or that effective control of the boards decision making is in the hands of persons resident in the UK
  

Companies and individuals may be resident in more than one country and if there is a double tax agreement between the two countries, the residence of the individual or company may be resolved so as to avoid the double taxation of the income arising in either place.

Non-Domiciled

There may be circumstances where a person, although not resident in the UK may be taxable for being ordinarily resident on worldwide capital gains. This would not apply to non-domiciled individuals resident in the UK for less than 7 of the last 10 tax years who are not generally subject the UK tax on capital gains on disposals of assets not situated in the UK and not remitted to the UK.

Investment income not derived from UK sources and certain other types of income of individuals resident in the UK but not "domiciled" there is only taxed to the extent that the income is physically brought into or spent in the UK. Broadly, a person is domiciled either in the country of their birth or in the county where they intend to reside permanently or for the rest of their lives. A special rule deems a person to be UK domiciled after 17 of the last 20 years of residence for Inheritance Tax purposes.

Special rules apply to trusts, UK situated real estate, non-residents trading through a branch.

© Michael Reason LLM 2000-2008