tax efficiency options for non-domicile

[BarbarianAtTheDoor]

You can't really register here as a foreign national employed with a limited company (all visa implications aside), since you would be deemed as a UK resident, which would also imply that your living expenses are not connected to your business.

What you could do though, is to set up a company in the country of your choosing (I'd rather not do it in the OZ, the tax authority there has a vengeance against single-source income companies, you might as well do it in a tax haven) and then (as the representative of that company) establish a UK branch here for said company. You would be employed by the foreign company, pay personal income tax here (since you would be a resident here for business), and pay company taxes in your mother-company's country of registration. Good thing about it is that you would have your own proper UK company with it's UK bank account, I'm not sure what the agents would say when they realised it was not a limited company, but it's worth finding out.

Agents calling are a dime a dozen anyway, and when an agent was really interested in me, they _never_ shied away from bending on the technicalities, but admittedly, I am running a proper UK limited co. at the moment.

You would be better off having a couple of people grouping together for the main company (preferably, but not neccessarily working in differing countries) and getting a decent lawyer to figure out the legalities of splitting up the money left over -after personal payouts- in the company based somehow on your income (think monetary incentives) generated for the company.

Fully legit, multinationals are doing the exact same thing when sending executives around the world.

[facboy]

i'm not trying to walk around any rules, i would just like to minimise my tax while staying within the rules. i have plenty of options open to me if i want to walk around the rules.

[ASB]

i'm not trying to walk around any rules, i would just like to minimise my tax while staying within the rules. i have plenty of options open to me if i want to walk around the rules.

Assuming you are non domiciled (and it's not just a matter of claiming to be, there are if I recall certain claims that have to be made) you are taxed on a remittance basis. Essentially this means UK sourced income or income remitted to the UK.

You have to ensure the income is not yours or attributable to you and is sent to an offshore entiry. The structure needed is something like:-

You - Agency - Uk front - offshore entity. If the offshore entity (or UK front) is able to pay you a small salary or similar and the balance is payable to the offshore entity as compensation payments then you might just stay within the rules. There are plenty of these schemes around, talk to some of them and make a decision. Even if you find a structure that genuinely keeps the income out of the UK HMCR reach it is also important that they are kept out of reach of the authorities in the country you happen you to be tax resident in at the time they are made.

Certainly you can sometimes imrove things by being non domiciled, but it depends on the individual circumstances. Also in the UK domicile and residency are two very different things.

It is also entirely possible that whilst tax-resident here you may also be simultaneously tax resident in Aus. That depends on their rules.

[facboy]

Assuming you are non domiciled (and it's not just a matter of claiming to be, there are if I recall certain claims that have to be made) you are taxed on a remittance basis. Essentially this means UK sourced income or income remitted to the UK.

You have to ensure the income is not yours or attributable to you and is sent to an offshore entiry. The structure needed is something like:-

You - Agency - Uk front - offshore entity. If the offshore entity (or UK front) is able to pay you a small salary or similar and the balance is payable to the offshore entity as compensation payments then you might just stay within the rules. There are plenty of these schemes around, talk to some of them and make a decision. Even if you find a structure that genuinely keeps the income out of the UK HMCR reach it is also important that they are kept out of reach of the authorities in the country you happen you to be tax resident in at the time they are made.

i think that's the fundamental bit i don't understand with all the 'offshore' options - if i am doing the work here, and the income is produced as a result of that work, it's uk-sourced income isn't it? i've not come across any structures which didn't involve some sort of 'dodge' in that area.

i checked out the limited company with working holiday visa (rung up borders and immigration) and after much checking and being on hold they said it was fine provided i wasn't employing anybody else, setting up premises, investing heavily in capital etc. so that sounds like it might be the way to go, all above board.

[ASB]

i think that's the fundamental bit i don't understand with all the 'offshore' options - if i am doing the work here, and the income is produced as a result of that work, it's uk-sourced income isn't it? i've not come across any structures which didn't involve some sort of 'dodge' in that area.

The question is whose income is it being generated. Just because you generate the fees doesn't make it your income.

Ultimately if you are not domiciled here then there *may* be ways to exploit this. But you will need specialist advice appropriate to your exact circumstance.

[max]

i checked out the limited company with working holiday visa (rung up borders and immigration) and after much checking and being on hold they said it was fine provided i wasn't employing anybody else, setting up premises, investing heavily in capital etc. so that sounds like it might be the way to go, all above board.

Good work. Going down the ltd co is the way to go. Other things you can do, so you are not disadvantaged by being an Australian, include "contracting out" your state pension, and applying to confirm your non-domcile status.

Contracting out will allow you to move any state pension you will pay into via your NI(national insurance), to an Australian pension when you return.

Non-domcile status will allow you to move any cash you know you don't need to spend in the UK, offshore, where you can earn good interest with no tax to pay. If this is returned to the UK, it will be taxed.

Your accountant should be able to help here.

[beermeister]

Let me know when you find out

As an expat living in the UK, all I can say is to choose wisely and cough up for a specialist accountant. I tried going down this sort of line but gave up after finding most accountants just don't have the specialist knowledge or, if they say they do, give you a bum steer. Unfortunately, these bum steers have cost me a lot so I said bollocks to the lot of them and did what every other UK resident does. The only thing I can offer you is Australia does not collect tax on dividends for companies that don't have the necessary connection with Australia and as a UK non-dom, the UK isn't interested in taxing these PROVIDED it is isn't remitted to the UK.

Sorry to sound pessimistic, but when you find out, let me know as well, albeit probably too late for me.

[facboy]

i have decided to go with the limited company for now. it has good returns (if not the absolute best) and no dodginess.

the offshore entity certainly has its attractions, i may explore what i can do with that at a later time. there's any number of schemes that will take your money offshore, the trick, as always, is in getting it from there to somewhere that it's useful without paying tax on it. most of the schemes revolve around pulling dodgies, or making yourself non-resident for a time so that they can pay it back to you (which can be a difficult thing to manage in and of itself).

not super keen on having 'my' money sitting in somebody else's control while i wait for it to come back to me. i'd prefer to get a bit less and have it all under my control, and all above board with no legal/taxation concerns hanging over my head in the future.

[ASB]

Facboy,

If you can live on < the higher rate threshold (about 38k) don't fraw divis that will take you into it. This is because up to the higher rate threshold there is no more tax to pay. Once in it there is 25% of the gross dividend.

Now comes a slighly tricky bit. By the time you leve the UK you need to not have control of the company but still own the shares. You liquidate the company and apply for concession C16. If granted you pay all the retained funds to yourself as a capital distribution. Now if you happen to be non resident at this point there is no capital gains tax.

But you will have to be careful as to the order you do it in. This is bacuse of a thing called the corporation tax exit charge. Basically this happens when a company ceases to be UK resident. The IR may argue that this happens when you yourself because non resident so it will be especially important to do everything in the right order. Of course whether there are any issues or not will depend on the level of retained funds.

[facboy]

ok thanks. i will bear that in mind, but it should be a good 2+ years away. i'm going with upton & co so hopefully they can advise me.