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UK Tax on overseas income

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Hi all

 

just a quick query regarding a client of ours,

 

they moved from the states in this tax year and are expected to be uk resident in a few months time, we have checked the residency status via hmrc website 

 

where I'm a little stuck is they have not earned any UK income but are continuing to earn overseas income 

Are they liable now to UK tax as they expect to be UK resident in the same tax year?

 

They only remit part of the overseas income into UK and are expecting to start trading in UK in the same tax year or next

 

any help would be appreciated!

 

thanks M x

Replies (9)

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By Accountant A
11th Oct 2019 17:16

Have a look at the HMRC manuals concerning residence; there is useful information there.

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By Accountant A
11th Oct 2019 17:27

PS If your client is a US citizen, (s)he continues to have US tax filing obligations.

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By David Treitel
11th Oct 2019 17:39

Assuming the client is a US citizen, the client remains US resident and taxable. Article 24 of the US/UK treaty explains how relief is given. Don't overlook advising the client to make payments to HMRC no later than 31 December 2019, so that there are adequate foreign tax credits to claim on the 2019 US return.

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Replying to David Treitel:
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By jcace
11th Oct 2019 20:24

Payments to HMRC in respect of what, to give a foreign tax credit on the 2019 US return in respect of what? There is no UK sourced income at the moment.

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Replying to jcace:
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By chicken farmer
11th Oct 2019 23:41

A UK resident is liable to UK tax on worldwide income as it arises, (subject to a claim for the remittance basis and/or relief under the DTA), so he could have a UK liability on his US source income

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Replying to chicken farmer:
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By jcace
12th Oct 2019 10:30

I'm aware of that. My question was pointing more towards who has first taxing rights, and therefore which of the two countries would be able to give a foreign tax credit.

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Replying to jcace:
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By chicken farmer
12th Oct 2019 10:26

You said "Payments to HMRC in respect of what, to give a foreign tax credit on the 2019 US return in respect of what? There is no UK sourced income at the moment." which is saying that there had to be UK source income for there to be a UK liability.

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Replying to chicken farmer:
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By Matrix
12th Oct 2019 11:07

Regardless of what goes on the UK return, there wouldn’t be FTCs for US source income.

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Replying to Matrix:
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By David Treitel
13th Oct 2019 16:05

Not quite correct. Under Article 24 the US source income is resourced so that the United States gives a credit for UK tax paid. The UK has the primary taxing right.

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