Edwards Greene Tax Tips 2019

KEY GUIDE | April 2019 | Tax Planning Tips 10 Your deemed domicile status will apply from the 16th year of UK residence, and you will then be subject to UK tax on your worldwide income and gains. Additionally, IHT will be chargeable on gifts of assets situated anywhere in the world. Once you have been in the UK for 15 consecutive tax years, you will have to leave the UK for at least 6 years before being able to return without any domicile consequences. 50 Realise gains free of UK CGT while living abroad. You can’t escape CGT on the sale of UK property while living overseas, but gains on other assets such as shares can be tax free, as long as you are non-resident for more than five years. The five-year clock starts from the day you become resident elsewhere. Levels and bases of taxation and tax reliefs are subject to change and their value depends on individual circumstances. The Financial Conduct Authority does not regulate tax advice. The value of your investment can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance. Investing in shares should be regarded as a long-term investment and should fit in with your overall attitude to risk and financial circumstances. Occupational pension schemes are regulated by The Pensions Regulator. Your home may be repossessed if you do not keep up repayments on your mortgage or other loans secured on it. Think carefully before securing other debts against your home. 44 Pay employees a tax-free allowance for each night spent away from home on business. A £5 tax- and NIC-free allowance can be paid for nights spent away in the UK on business. This is in addition to the cost of the employee’s accommodation, meals and travel, which can be reimbursed if receipts are produced. The tax-free amount is £10 per night if the overnight stay is abroad. 45 Encourage car sharing with tax-free payments to employees. Pay your employees an extra tax-free 5p a mile for each fellow employee they take as a passenger, when travelling to work- related training courses or making other business journeys using their own car. 46 Don’t forget to party! Even the smallest business can host an annual tax- free social function for its entire staff, including the directors and their partners. As long as the cost per head is less than £150 (including VAT), employees are not taxed for having a good time and the company benefits from full tax relief on the expense incurred. 47 Supply your employees with one tax-free mobile phone each. Mobile phones provided to employees are tax free, as long as it is the employer rather than the employee who owns the phone and takes out the contract with the telecoms company. Overseas aspects – planning if you leave the UK 48 Be careful of your UK residency status. Your UK tax residency status is determined on a year-by-year basis If not automatically resident or non- resident, your status is based on the number of days you spend in the UK and the number of UK ties you have. There is no averaging of days of residence between tax years. You need to be particularly careful if you have left the UK, and want to remain non-resident for tax purposes based on the number of UK ties that you have. You also need to be careful of the number of days that you spend working in the UK. A detailed record of your movements is essential. 49 Consider leaving the UK to avoid UK taxes on your worldwide income and gains. If you are not UK-domiciled for tax purposes, only the income and gains you bring into the UK are taxed here, although you may have to pay a remittance basis charge. However, you will become deemed domiciled in the UK once you have been tax resident here for at least 15 out of the previous 20 tax years. Tip You can reimburse up to £8,000 of a new employee’s moving costs tax free if they have to move house to take up the employment. EXAMPLE Stephanie’s UK residency status is such that she is permitted two UK ties without being treated as UK resident. However, during 2019/20, she spent more than 90 midnights in the UK. This will result in Stephanie having a further UK tie for the following two tax years, so she will be resident here for 2020/21 and 2021/22.