Perpetual tourist and UK taxation

Is it possible to be a perpetual tourist and not pay UK taxes?

Didn't find your answer?

I have a client who is European and has lived in the UK for many years, owning a UK property that has been their main residence throughout ownership. He doesn't need to work due to having an off-shore family trust fund that pays an annual amount plus he owns a stock portfolio that is managed off-shore and provides income and gains. There is also an inheritance that has recently released a substantial amount of cash.

The client is looking to leave the UK, will sell the PPR (no CGT) and is considering selling the stock portfolio and wonders whether to do so while UK resident or not.

The client happily rents apartments in three other European countries and I am thinking that it would be quite simple to satisfy the SRT in terms of being non-resident (leaving on April 10th and not returning for example) and it might be possible to do something similar in the other countries such that he is not a tax resident in any one of the countries.

So my question is can someone be a perpetual tourist (from a UK perspective) or is there a rule that says if you are not a resident of another country you will remain a resident of the UK? I know that it was quite common pre-SRT (Gaines-Cooper etc) however I haven't read much about it since the SRT came about.

Replies (15)

Please login or register to join the discussion.

Replying to David Ex:
Chris Caspell CTA TEP
By ccaspell
08th Feb 2024 19:15

Thank you David. I did search AccountingWeb but could not find anything that was recent. "Tax Resident of nowhere" was clearly the search term I should have used. I am also grateful for the google search idea - I hadn't thought of adding the web-site name to the search - brilliant! I shall use that in the future.

As far as my question asking 'is it possible', from Richard Thomas's brilliant answer, I glean that the answer is technically yes, but whatever you do, check the Double Taxation Agreements first. Good advice indeed.

Thanks (0)
avatar
By Tax Dragon
08th Feb 2024 21:13

Questions of this type come up frequently. For future readers who stumble across this thread, and who think (as many seem to) that 'resident nowhere = taxable nowhere'... that's simply not true. Just think about it - if you've ever had any foreign income while you were UK resident, you've probably noticed it's already been taxed overseas before you received it - ie it's taxable in a country you're not resident in. Why would that stop just because you'd lost residence in another country - the UK?

If anything, your exposure to such foreign tax increases if you cease to be UK resident, because you lose the protection against this foreign tax that the UK-foreign DTA affords while you live here.

[Note only: There are different rules for different taxes and this comment does not address what the OP is talking about.]

Thanks (1)
Replying to Tax Dragon:
avatar
By FactChecker
08th Feb 2024 21:35

And one tax that might well bite the "perpetual tourist" (in the wallet if not on the backside) is the recent but enthusiastic adoption in many countries of a 'tourist tax'!

Thanks (1)
Replying to Tax Dragon:
Chris Caspell CTA TEP
By ccaspell
08th Feb 2024 22:27

Absolutely and I was not equating nowhere resident to nowhere tax. The nub of my question is if a non-domiciled individual with no UK arising income becomes non-resident due to one of the automatic SRT tests and doesn’t plan to return to the UK, is there a mechanism for HMRC to tax that individual? And I think the answer to that is no, but I wanted to check.

Thanks (0)
Replying to ccaspell:
avatar
By Justin Bryant
09th Feb 2024 09:22

Only the TNR rule would potentially catch them. The requirement for ‘five years or less’ includes a period of exactly five years. As a result, where the individual is not, at any point, treaty resident in another country and is not eligible for split-year treatment in the year of arrival or departure, a non-resident period of six complete tax years will be required. ( A lot of people overlook that.)

Thanks (2)
Replying to Justin Bryant:
By Duggimon
09th Feb 2024 09:27

It does indeed sound nasty, I think I'd rather pay the tax

https://en.wikipedia.org/wiki/Trap%E2%80%93neuter%E2%80%93return

Thanks (1)
Replying to Duggimon:
avatar
By JB101
09th Feb 2024 10:13

I think you'll be OK, Duggimon -assuming you are not a cat ;)

Thanks (0)
Replying to JB101:
avatar
By Tax Dragon
09th Feb 2024 10:25

Check the avatar.

Thanks (0)
Replying to Tax Dragon:
avatar
By JB101
09th Feb 2024 10:29

ooooohhhh!
Sorry - I 'm feline stupid now!

Thanks (1)
Replying to Justin Bryant:
Chris Caspell CTA TEP
By ccaspell
09th Feb 2024 11:17

Thanks Justin. I think the plan is to [***] off around the globe for a bit then head for their home country, never to darken the doors of the UK again, so the TNR rule is unlikely to come into play, but always good to note.

Thanks (0)
Replying to ccaspell:
Chris Caspell CTA TEP
By ccaspell
09th Feb 2024 11:21

and the *** in my earlier post is not really a naughty word...well not really naughty...but AW thinks it is, so I consider myself duly admonished.

Thanks (2)
Replying to ccaspell:
avatar
By FactChecker
09th Feb 2024 13:19

Maybe client should ease off on the use of diuretics?

Thanks (1)
Replying to FactChecker:
Chris Caspell CTA TEP
By ccaspell
09th Feb 2024 13:22

Are you taking the P? ;-)

Thanks (1)
avatar
By KABcraigmore
12th Feb 2024 10:42

No. He's taking the puss

Thanks (0)