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UK Tax Questions - What maximum time can a UK citizen live in the country and not pay taxes?

  • I've heard that if an ex-pat spends no more than 3 months in country, he/she is not subject to British income taxes. Is this true? Also, does an owner of an offshore corporation enjoy tax free status if offshore business transactions are drafted in Monaco, which is a tax haven? The corporation is NOT a Monaco based entity. The firm is Seychelles based. Example: A contract in America was executed in Monaco. The Seychelles based company is a owned by a British ex-pat who spends no more than 3 months per year in the UK. Must the income from the American contract be reported and have income taxes paid on the earnings?

  • Answer:

    You're confusing "citizenship" with "domicile" and "residence". If you're not resident in the UK for tax purposes, you'll pay no UK taxes. Non Doms have different rules and a minimum tax threshold. Company residence has no effect on the director's tax position.

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Residency is complex. We now count "midnights" for determining residency. As a rough rule of thumb the country in which most midnights were experienced is the country of residence. HMRC would expect (but cannot insist on) a primary residence in the same country. Property, busines activity, personal choice, the opinion of the other tax authority - all have bearing on determining where a person is resident and ordinarily resident (NOT the same thing). The income must be reported to the authority in which the person is deemed to be resident. In the UK these decisions are made by the CAR team. Other countries have equivalent operations. Every case which involves dispute would be judged by a technician in that team.

Petrusclavus

Although it is thought that there is a maximum time you can spend in UK it is actually not true. IFor instance if you have a house in the UK which you rent out or other business assests then you will not be classed as non-dom. It is quite complex.

Paying tax is based on gross income, so if he earns more than £6475 in any year or part year, then he is liable to pay tax

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