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Declaring foreign income on a tax return

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I have a new client who is Dutch but a UK resident. He completes a self assessment tax return because he receives a Dutch state pension and needs to pay UK tax on it. He also transfers funds of £2200 each month from his Dutch bank account to his UK one. Does he need to declare this on his tax return and pay UK tax on it? He also pays alimony to his ex-wife from this £2200 amount each month. Is this tax deductible?

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By Jude Edmondson
17th Dec 2019 22:38

I will need to check the source of the income and I'll get back to you. Thanks.

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By Jude Edmondson
18th Dec 2019 08:29

The income comes from his investments. I'm therefore assuming that this should be taxed in the UK.

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By chicken farmer
18th Dec 2019 08:59

Has he acquired a UK domicile of choice?

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By Jude Edmondson
18th Dec 2019 09:07

Thanks for your help on this one. I'm not entirely sure but he has lived in the UK since retirement (about 25 years) and has a permanent address here and his children and grandchildren all live in the UK. He has been completing UK tax returns for several years.

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Replying to Jude Edmondson:
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By chicken farmer
18th Dec 2019 10:39

There's more to domicile than physical presence and the residence of children and grandchildren is irrelevant. You need to swot up on the subject. Find out from the previous agents whether they treated him as UK domiciled or not - see what pages were filed with previous SA returns. If they claimed he was not UK domiciled, on what basis? There used to be a form DOM1 which sought to establish domicile (maybe there still is), was one ever completed? was his domicile ever the subject of correspondence?

The point is that if he is UK domiciled then he is liable on his worldwide income whether this is remitted to the UK or not. You have said that he still has an account in the Netherlands and other investments, perhaps there has been some foreign income which has not been remitted to the UK which should have been declared?

As far as alimony is concerned, my memory tells me that relief was abolished way back in 1988!

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Replying to Jude Edmondson:
Caroline
By accountantccole
18th Dec 2019 12:10

If he is UK resident and has been for 25 years then he needs to be taxed on worldwide income regardless of remittance. Deducting any tax already paid in NL
Sounds like your numbers aren't high enough to warrant remittance basis charge.

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Replying to accountantccole:
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By chicken farmer
18th Dec 2019 15:33

Yes, he is probably deemed domiciled from 2017, but he may have already have acquired a UK domicile of choice before then. I was inviting the questioner to consider the question of domicile, which he does not mention in his post.

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