ArizonaTrail

I moved to the US when I was 22 and stayed 20 years and counting. Now a US/UK dual citizen. This year I'm spending quite a bit of time back in the UK due to a family issue. I telecommute and am being paid by my US employer in a US bank account. My understanding reading online is that I cannot spend more than 183 days back in the UK in a tax year or I will be considered resident and domiciled in the UK and my global income will be subject to UK tax. I'm planning to consult a tax advisor about this situation. I haven't yet spent 183 days in the UK but I was planning to do so. I'm curious whether anyone else on this forum has been caught in this situation of having to limit their time in the UK for tax reasons. Any insights here?

newadventure

Hello ArizonaTrail,
Others with more knowledge will chip in, but to get the ball rolling:
I doubt you will be domiciled in the UK if you spend more than 183 days, that is a different thing altogether. I believe you will be subject to UK tax though. You will also be subject to US tax on global income (as a US citizen, this will always be the case). You will need to become familiar with the UK US Tax Treaty. The usual outcome is that you end up paying the higher of the two possible tax rates, but not both

ArizonaTrail

Thanks, newadventure. The IRS will be disappointed to learn that my US income is my only income!

I was born in the UK and have a UK domicile of origin at birth, so according to this UK govt info below, as soon as I become UK resident, I am also domiciled. Being resident seems to be okay as I'd just pay tax on the money I transfer over to the UK. Being domiciled looks really bad, as the UK would tax my worldwide income. This is what I'm trying to avoid.

If you acquire a domicile of choice outside of the UK

If you were born in the UK and have a UK domicile of origin at birth, you can acquire a domicile of choice outside the UK under common law, if you’ve resided in another country or law territory with the intention of staying there permanently.

If you then return to the UK on or after 6 April 2017 and become UK resident for that year, you will automatically be deemed domiciled in the UK for tax purposes, under Condition A.

durham_lad

Have you checked your situation against the statutory residence test?

https://www.gov.uk/government/public...-test-srt-rdr3

I would guess that you are going to be taxed as a UK resident and it would be a matter of whether that would be as domiciled or not.


Before the current statutory test came into place the rules were a little more complex, being more than 183 days in any one tax year (April to April) or an average of 90 days over a rolling 4 year period, and I used to keep a spreadsheet detailing how many nights we were in the UK to avoid becoming tax resident because once retired we did spend lots of time visiting before deciding to move back permanently. One year our UK bank noticed that we seemed to have spent a lot of time in the UK from our ATM card usage and sent us an HMRC form to complete showing travel records to show that we were not tax resident. At the time our UK bank had our US address and us recorded as non-resident in order to pay interest tax free on our savings (this was before the £1,000 of interest tax free we have today).