RedDragon2008

In the UK

If I use a foreign credit card (card automatically cleared each month)

Domicile outside EU but tax resident in EU.

dunroving

Why would think you'd pay tax for making a purchase?

RedDragon2008

Sorry I should explain

If I am living in the UK and using the credit card for COL.

dunroving

I still don't understand. COL = cost of living? So you'd be living in the UK, and using an international credit card to pay your bills and living costs? In your first message you said you were domiciled outside the UK. Domicile = legal place of permanent residence, so how could you be living in the UK but domiciled outside the UK?

I think we need a more detailed description of what you are trying to do in order to give you an accurate answer. How many days per year do you plan to live in the UK?

I think the answer has less to do with what credit card you use and more to do with how many days you spend in the UK - see the HMRC Web site. Other than complex situations, it is pretty clear on how many days' residence in the UK makes you liable for UK tax. The credit card thing is irrelevant.

RedDragon2008

You can have a different domicile residency to your actual tax residence. I agree it is slightly more complex. Domicile residency is basically a longer term residency which you cant pick and choose year to year. For example whether I live in Australia, the US or Europe my domicile status remains.

For example while on temporary Australian Visa I am tax resident (ie subject to tax on income derived within Australia, but not on world wide income, which is why most of my income is originating in Asia.

It might be the question is more complex for this forum, but worth a try in case any other posters have been in same position.

Englishmum

I'm certainly no tax expert but I'm fairly sure that if one is physically present in the UK for more than 90 days per year (I assume meaning the tax year 6th April to 5th April) then one is liable for UK taxes.

We have a little house in Essex which we rent out but even though we don't live in the UK we are liable for paying tax on the income as the income is derived within the UK mainland.

Going slightly off topic, it is well known that certain celebrities and sports stars eg. Mick Jagger, Rod Stewart, Phil Collins, Lewis Hamilton, Jenson Button etc. (and probably the Beckhams) carefully limit the days they spend on trips to the UK - ie. less than 90 days a year - and have properties in other countries where they split their time.

RedDragon2008

Hi Dunroving

Thankyou for trying to help (it is appreciated). COL yes is what I mean by cost of living.

This link which was thankfully PM to me might shed some light on what I was after:

http://www.hmrc.gov.uk/nonresidents/..._to_the_uk.htm

It appears a change was made in 2008 but you can see why.

Looks like its now a GBP 30k base rate with no personal allowances.

Guess I will just have to prepay school fees and rent a year or 2 in advance before I arrive


Here are the relevant extracts:

Remittance Basis

In the past, people who were resident in the UK but were also either not ordinarily resident and/or non domicile here, were taxed on their UK income and gains but not on their overseas income or gains unless they were remitted to the UK. By this we mean paid to or brought to the UK in any way. This is called the remittance basis of taxation. Provided people left their overseas income abroad they were not taxed upon it. If people remitted any of their overseas income or gains to the UK, they paid tax on what was brought here. This was the situation before 5 April 2008 and this is changing from 6 April 2008.

Not ordinarily resident

It is possible to be resident in the UK but also, at the same time, be not ordinarily resident. We regard people as being ordinarily resident if they come to the UK regularly and their visits average 91 days or more a tax year. The date from which we regard people as being ordinarily resident will depend on their intentions.

Follow this link for more detailed information in our online guidance (IR20).

Domicile

Domicile is a concept of general law and might be different from a person’s residence or nationality. A person can be resident in the UK but have a domicile in another country. A country of domicile is usually acquired at birth and could be:
• the country a person considers their permanent home
• the country which a person’s father considered to be his ‘home country’ at the time of their birth or if their parents were not married, their mother’s ‘home country’
• for women married before 1974 acquired from their husband when they married

Follow this link for more detailed information in our online guidance (IR20).

RedDragon2008

Look under not ordinary resident

Thanks for your comments English Mum

jbrown

The so-called 91-day rule (91 days per year averaged over 4 years), but it's just a guide. In any case, a major shake-up will likely happen next April:

http://www.hm-treasury.gov.uk/consul...dence_test.htm

old.sparkles

Most purchases are taxed - VAT

And OP - if live in uk, pay tax in uk. Too many people looking for loopholes

RedDragon2008

Dont mind paying VAT

But do mind paying more Tax than necessary or put it this way why would someone pay 47.5% tax when they could 17%?

dunroving

I know that - but the OP is apparently talking about income tax.

Panhandle

Englishmum, can I ask, if I have savings in the bank earning interest but do not spend more than 90 days a year in the UK, does this mean the interest will be tax free?

dunroving

Presumably as it's income, it falls under the same regulations as any other income. It may be tax free in the UK but taxable wherever you are currently living. I vaguely recall filling in a bank form (this was a long time ago) to receive savings interest tax-free, but declared it on my US tax return ... have you tried looking on the HMRC site for the answer?

Panhandle

Dunroving, I did not research this, this was just a spur of the moment question, as the topic was on tax, I have filled in forms allowing me to do the tax deductions from the interest rather than the bank as the interest will be quite large and I didnt want to wait for the tax office to give me a refund as Ive heard this can take sometime.
I was just wondering in a scenario where sometime in the future I would end up living again overseas and what my tax situation would be etc.
I took my savings out of Australia to take advantage of the good exchange rate and also I read that I would be taxed at a higher rate if I was out of the country for an extended period in one year.
Its so easy to fall into these tax traps, I know ive paid for it in the past!

I have browsed the HMRC website.