Tax issues for a foreigner moving to the UK

[MyNameIsUrl]

Obviously this is a big subject, but it would be very helpful if anyone could suggest the major topics for me to investigate, so that I don’t completely overlook something vital.

A Canadian is moving to the UK to live and work for a couple of years or more. Her apartment in Canada will be let, so there will remain a Canadian bank account to receive Canadian income. I expect she will get a job in the UK. She has no dependents.

Current areas I am investigating on her behalf:
- Resident status in Canada (probably non-resident?)
- Resident status in UK (probably resident?)
- Tax and NI in UK (get a NI number, PAYE exactly like a UK citizen, no need to notify HMRC of overseas income?)
- Tax in Canada (25% deducted from rental income by the agent, fill in a Canadian tax return to get any refund due after the tax year end?)

What other tax-related issues should I be googling?

[tjh290633]

Have a look at HMRC's help sheets on income from property and foreign income.

TJH

[Lootman]

no need to notify HMRC of overseas income?

That is true for as long as the overseas national is non-resident in the UK or non-domiciled in the UK.

The rules for residency are now quite precise and so that should be a straightforward determination.

The exact opposite is true for non-domicile: domicile is an archaic concept that few other nations adopt, but nevertheless can be very useful in tax terms for foreigners living in the UK as their foreign non-patriated income can be ignored for tax purposes.

The other thing I would look at is the tax treaty between the UK and Canada which should ensure that the total tax owed cannot exceed the amount that is owed in either country. Also be aware that the tax years are different for the two nations, complicating calculations and reporting.

Finally there are provincial taxes in Canada as well as national taxes, but it is possible that someone non-resident in Canada doesn't have to worry about those. Generally the western provinces have lower taxes but the eastern ones are more expensive, notoriously Quebec I believe.

[genou]

What other tax-related issues should I be googling?

I've seen the other replies, and echo the need to understand non-dom status.

Pensions. What arrangements does she currently have in Canada, what impact does being abroad make? She will be auto-enrolled over here ( if an employee [ and I assume earning enough] ) unless she opts out. She needs to think about what that means in terms of opt-out or getting the money back to Canada.

[MyNameIsUrl]

Thanks for the comments – following up on those I now understand:

- she will be resident in the UK (First Automatic UK test: ‘Did you spend 183 or more days in the UK in the tax year?’). Non-dom status would seem to be a huge hurdle, available only in rare circumstances

- she will have to show property income on the ‘Foreign’ pages of an SA form (the Property pages are helpfully called UK Property)

- there is a double taxation agreement, and the Canadian tax liability (calendar year) is to be shown on the SA form. The tax deducted at source in Canada (25%) by the agent isn’t necessarily the correct amount of tax due there, so a Canadian tax form will need to be completed to pay the correct amount there and get figures for the UK SA form

[Lootman]

Non-dom status would seem to be a huge hurdle, available only in rare circumstances.

Can you explain that statement?

It is my understanding that any foreign national is non-dom by default, simply because they are not deemed to be UK domiciled in the way that someone born and bred here of UK parents is. So it is not something to apply for or qualify for specifically, but rather it is the default.

The question then is more if she lives here for many years, at what point would HMRC deem her to have become UK domiciled? I don't know the answer to that but certainly losing UK domicile can be quite hard to do and take a long time living overseas. I have read that it can take up to 20 years. So I'd guess the same applies to acquiring UK domicile.

It is a sticky quality.

[MyNameIsUrl]

Non-dom status would seem to be a huge hurdle, available only in rare circumstances.

Can you explain that statement?

It is my understanding that any foreign national is non-dom by default, simply because they are not deemed to be UK domiciled in the way that someone born and bred here of UK parents is. So it is not something to apply for or qualify for specifically, but rather it is the default.

The question then is more if she lives here for many years, at what point would HMRC deem her to have become UK domiciled? I don't know the answer to that but certainly losing UK domicile can be quite hard to do and take a long time living overseas. I have read that it can take up to 20 years. So I'd guess the same applies to acquiring UK domicile.

It is a sticky quality.

There appear to be substantial tax advantages available if one is non-dom, but Wikipedia says there are fewer than 150,000 in the UK (and lists some mega-rich ones). So my assumption (possibly incorrect) was that it is a special status which is to be achieved, rather than a default. My interest, on behalf of a Canadian, was whether she would have to put rental income from a property in Canada on her UK SA form (given that it seems clear she will be resident in the UK for tax purposes).

[genou]

There appear to be substantial tax advantages available if one is non-dom, --- My interest, on behalf of a Canadian, was whether she would have to put rental income from a property in Canada on her UK SA form (given that it seems clear she will be resident in the UK for tax purposes).

Have a look here - https://www.gov.uk/tax-foreign-income/n ... -residents

She could use remittance basis to avoid tax on the rental income, but it is probably outweighed by the loss of allowances against UK income.

[Lootman]

There appear to be substantial tax advantages available if one is non-dom, but Wikipedia says there are fewer than 150,000 in the UK (and lists some mega-rich ones). So my assumption (possibly incorrect) was that it is a special status which is to be achieved, rather than a default.

I think that the "special status" you refer to is a self-election as non-domicile for the purpose of being taxed on a remittance basis. This requires the payment of an annual remittance basis charge, which I believe is of the order of thirty thousand pounds. Clearly the number of people who consider it worthwhile to pay that are fairly limited, as you would need to have a very high foreign income to make such an election worthwhile. That would be where your 150,000 number comes from, I believe, i.e. very wealthy foreigners who have made their home here.

However there are probably millions of people living in the UK who are not deemed to have UK domicile under common law, but who have no reason to make that election and pay the remittance basis charge. Since they make no election it is hard to know how many there are, but I personally know a few dozen myself. In many cases the foreign income may be quite low, e.g. just some interest on a savings account. Or else the other nation taxes that income at a higher rate and so no extra UK tax would be owed anyway under double taxation treaties.

More here:

https://www.gov.uk/guidance/deemed-domicile-rules

https://assets.publishing.service.gov.u ... s_2016.pdf