Where in the World…… …..Will I retire? A whistle stop tour highlighting some of the opportunities and pitfalls A whistle stop tour highlighting some of the opportunities and pitfalls Ed Read Cutting Director, The Fry Group Belgium Dale Butcher CTA STEP Affiliate, Tax Manager, Head Office, Worthing Marc Quaghebeur – Avocat – Partner, Cabinet David
Who are The Fry Group? Who are The Fry Group? Financial advisers – UK since 1898 Brussels office located and regulated in Belgium since 1996 Wealth (including EU Pension Transfers) Wealth (including EU Pension Transfers) Tax Tax Estates Estates NO ties to any financial institutions Advice tailor-m ade to any situation All advice given in written reports Local knowledge Local knowledge – international perspective international perspective
Where in the World……? Where in the World……? UK – The Fry Group The Fry Group Belgium France Spain Portugal Italy Germany The Netherlands Ireland - Marc Quaghebeur Marc Quaghebeur
Dale Butcher CTA STEP Affiliate Dale Butcher CTA STEP Affiliate Tax Manager, Head Office (Worthing) Tax Manager, Head Office (Worthing)
Introduction • I am a UK tax adviser; m y advice for overseas tax is lim ited to UK interaction with Double Taxation Agreem ents • Our advice is only as good as the inform ation you provide to us • I will discuss m atters in general today; do not take any actions based on this presentation without speaking to a tax adviser first
Agenda • Dom icile • Statutory Residence Test • Split Y ear - Returning to the UK • Taxation of Property • EU Com m ission Em ployees • Personal Tax Changes • Foreign pension lum p sum s • Tax treatm ent of pension under UK/Belgium DTA • Term ination Paym ents • Questions
Domicile • What is dom icile? • Why does it m atter? – Inheritance Tax, the rem ittance basis of taxation • Origin – Father’ s dom icile at birth (illegitim ate children follow m other’ s status • Dependence – Child’ s dom icile changes with father’ s • Choice – Take up physical residence and intention to reside there perm anently or indefinitely • Deem ed – 15/20 year rule, shedding UK dom , retains it for 3 years for IHT purposes
Domicile – changes from 6 April 2017 • Form ally Dom iciled Residence (FDR) – UK dom icile of origin and born in the UK but establish a dom icile of choice elsewhere, when UK residence recom m ences you becom e UK dom iciled again • If UK resident for 15 out of past 20 years you becom e UK dom iciled for all tax purposes • Capital Gains Tax rebasing applies autom atically to all assets of a non UK dom iciliary who becam e deem ed UK dom iciled on 6 April 2017 (and no later) as the Rem ittance Basis Charge has been paid in one or m ore previous tax years
Statutory Residence Test (SRT) Introduced 6 April 2013 Individuals will be UK resident for a tax year of they do not m eet any of the autom atic overseas tests and: • They m eet one of the autom atic UK tests, or • The sufficient ties test Steps to ascertain residence status under SRT: Step 1: Step 1: Consider whether you spent 183 days in the UK in the tax year Step 2: Consider the three autom atic overseas tests. If m et, non-UK resident Step 2: Step 3: Step 3: Consider the second and third autom atic UK tests. If m et, UK resident Step 4: Step 4: Consider the sufficient ties test. If m et you are UK resident. If you do not you are non-UK resident Day Count: Day Count: • Midnights are counted as day in the UK • Day of arrival in the UK will usually be counted, day of departure will not
Automatic Overseas Tests First: First: • UK resident in the previous three tax years • Spent fewer than 16 days in the UK Second: Second: • Non-UK resident for more than three tax years • Spent fewer than 46 days in the UK Third: Third: • Left the UK for full time overseas employment • Spent fewer than 91 days in the UK • Work an average of 35 hours per week (specific calculation) • No more than 30 UK work days in which you work 3 hours or more • Test does not apply to relevant workers
Automatic UK Tests First: First: • Spent more than 182 days in the UK Second: Second: • You have home in the UK, available for 91 consecutive days, spend 30 days there • You have no home overseas or • You have a home overseas where you spend less than 30 days Third: Third: • You carry out full time work in the UK in any period of 365 days with no significant break • Specific calculation to determine full -time UK employment
Sufficient Ties Tests Family tie: Family tie: • Spouse or civil partner living in the UK • Child under the age of 18 if you see them m ore than 60 days in the tax year Accommodation tie: Accommodation tie: • Place to live in the UK – does not have to be owned • Available for continuous period of 91 days or m ore • Spend one or m ore nights there • Spend m ore than 16 nights if hom e of close relative Work tie: Work tie: • 40 work days where you work m ore than 3 hours per day • Different rules for relevant workers 90 90-Day tie: Day tie: • 90 days or m ore in the UK in the previous year • UK resident previous two tax years will count as 90 days Country tie: Country tie: • UK resident in previous 3 tax years • More m idnights in the UK than any other country during the tax year
Exceptional Circumstances Exceptional: Exceptional: • Local or national emergencies, such as civil unrest • Natural disasters • Sudden life -threatening illness • A life-threatening illness to a spouse, civil partner, dependent child Not Exceptional: Not Exceptional: • Life events, birth, marriage, divorce and death • Choosing to come to the UK for medical treatment • Visiting and caring for elderly parent/relative • Travel issues, flight or train cancellations 60 day limit, not an allowance 60 day limit, not an allowance
Split Year – Returning to the UK 5 Cases 5 Cases Case 4: Case 4: Starting to have a home in the UK only Case 5: Case 5: Starting full -time work in the UK Case 6: Case 6: Ceasing full -time work overseas Case 7: Case 7: The partner of someone ceasing full -time work overseas Case 8: Case 8: Starting to have a home in the UK Potential Pitfalls: Potential Pitfalls: • The SRT must be applied first – UK resident for split year to apply • More than one case can apply – ordering process • Not always physical date of arrival • Giving up overseas home could trigger residence earlier • Some cases require action in the following year
Property Taxation Numerous changes in recent years: • Incom e tax – m ortgage interest relief reducing, wear and tear allowance withdrawn and cost of replacem ents now allowed • Capital Gains Tax – NRCGT regim e, will also now apply to property rich com panies and all UK land and property (m ore of which to com e) • Main Residence Relief - Lettings Relief restricted to shared occupancy, Final grace period for m ain residence relief reduced from 36 m onths to 18 m onths and now to 9 m onths • SDLT – 3% supplem ent for additional properties introduced and further changes to com e • A TED – Additional taxation of UK properties held in com panies • Non UK com panies – carrying on a UK property business will now be charged to Corporation Tax rather than incom e tax
Non-Resident Capital Gains Tax (NRCGT) • From April 2019 includes all UK land and property • Potential capital gains tax on disposal of land and property • Three methods of calculation • NRCGT return due within 30 days of completion • Temporary non -residence needs to be considered
European Com m ission Em ployees Recruited to the Y es No com m ission from UK? SRT conditions m et Do you work within to be No the EU? Non UK Resident Y es Y es No SRT conditions m et Non-UK resident for both UK resident for incom e tax to be incom e & CG tax purposes & CGT purposes - salary Non UK Resident - salary exempt under exem pt under protocol protocol Y es No Resident for incom e tax & UK resident for incom e tax Non resident for CGT & CGT purposes - purposes - salary exem pt salary exem pt under under protocol protocol
Personal Tax Changes from 6 April 2019 • Tax free personal allowance rose to £12,500 • 40% tax band started at £50,000 • Transferable marriage allowance rose to £1,250 • Capital Gains annual exemption rose to £12,000 • Dividend allowance remains at £2,000 • Lifetime allowance for pensions savings rose to £1.055m
Pension Lump Sums UK residents: UK residents: • Previously when a lump sum was taken from a foreign pension the UK tax payable could be reduced if there was “foreign service” • From 6 April 2017 the reduction for foreign service has been removed for benefits accruing in the pension after that date • Relief under Double Tax Treaty may still be considered Non -UK residents: Non UK residents: • If you are non -UK resident you may be able to take a lump sum from your foreign pension free from any UK tax • In certain circumstances, if the foreign pension received UK tax relief you may now need to be non -UK resident for 10 years to escape UK tax on your lumps sum payment
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