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A taxing question
Trevor Wilkes, a tax adviser, answers an Emigrate reader's taxing question
Dear Emigrate
We are planning to emigrate to Canada and are considering going via the Middle East. Can you tell me what tax would be applied to our savings earned in the UK and also how we would be taxed on savings made in the Middle East (bearing in mind they are earned tax free, I wondered if there would be a difference)?
Thank you so much,
Helen
Dear Helen
In response to your enquiry concerning UK tax implications of emigrating abroad, it is worth remembering that what UK tax you need to pay is determined by your residence status. UK residents are generally taxed on their worldwide income and capital gains. As you will be moving abroad, you may become non-resident for UK tax purposes.
As a result, you will only be taxed on your UK arising income and your UK investment income will remain taxable at the savings rate of 20 per cent. Any non UK income, such as from salary or investments, will be exempt. You can also be exempt on worldwide capital gains subject to certain conditions.
Domicile is also an important aspect to consider. Domicile is different to residence and relates to a person's natural homeland. If you are domiciled in the UK, full exposure to inheritance tax continues. If it is not your plan to return to the UK and to settle permanently somewhere else, it is possible to improve your inheritance tax position to the extent that only UK sited assets would be chargeable in this instance. This is a particularly complex issue.
Indeed, there are likely to be other aspects that would need to be considered, such as your UK property if you decided to retain this to let, saving for the future, pensions and estate planning but to name a few topics of interest.
Trevor Wilkes
For further info: The Fry Group
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