Foreign income tax for a non-domicile resident.

Hello, I hope everyone reading my thread is well :) I am an EU national and have been living in the UK for the past six years. I am currently working and studying in England. My family and home are in my native country, where I plan to return after completing my master’s degree. I consider myself as non-domiciled resident. This year, my mother informed me that she can no longer manage the family business and wants to transfer ownership to me. The business is quite small, consisting of four wooden cabin homes that we rent out for two months each year (during the summer). The income from this business will remain entirely in my home country, as my mother uses it to cover living expenses and maintain the cabins. My question is, do I need to pay tax in the UK for this business? I am currently struggling to cover my expenses while working and studying, and additional tax obligations would make it even more difficult to pay my bills. The taxes in my home country will be paid. The annual income from the business is approximately £8,000-£10,000. Thank you in advance for your help.

Hi sbbrk,
Guidance at (TSEM9150 - Ownership and income tax: legal background: ownership: legal and beneficial ownership - separation) explains the difference between legal ownership and beneficial ownership.  
If you become the legal owner of the business, but your mother remains the beneficial owner of the income from the business, then only your mother will be taxable on the properties income, in the country that the properties are located.  As your mother is not resident in the UK, she would not be taxable in the UK.
Thank you.

 

Hello, thank you for the reply. So, she will be the legal owner and I’ll figure as a beneficial owner, since she can’t take care of this anymore. What in such case? I will not transfer any money to the UK.

So I will have to pay tax in both my home country and the UK? Even if there is a double taxation agreement between both countries and I don’t bring any money to the UK? Thank you

Hi,

You will be the legal owner as she is transferring the business to you. As a non domicile, you will not be taxed on the income if you do not transfer it to the UK.

Thank you.

Hello, So, I will be tax payer in my country for this business, I’ll figure on all payments and bank transfers. She will be the property owner, I plan to rent it from her and continue the business. I will figure as an owner of the business and taxpayer for that it, but not the owner of the land. The money won’t be transferred to the UK, as my family needs it. Also domicile rules are very difficult to understand. I’ve been living and working in the UK for 6 years and I plan to go back to my country after masters degree, my family is there. But I’m working here and I’m a tax resident in the UK. I also spend all year here. In case I don’t have to pay tax for that business in the UK, do I still have to declare it by completing self assessment online? Thank you very very much for all your help here. P.S. Sorry for my chaotic reply, but it’s all a bit confusing to me.

Hi,

If you are non domiciled and you do not bring it to the UK, you do not declare it here.

Thank you.

How to determine and prove it that I’m non domiciled? What if HMRC will see that I get that money on my overseas account and don’t declare it? Will they know that I’m a non domicile? Because I need to provide my UK’s national insurance number when I’m opening a bank account in my home country.

Hi,

You can see guidance here:

Remittance basis 2024 (HS264)

Thankyou.

Hi sbbrk,
You need to declare on the residence page of the tax return that you are non domicile and you are claiming the remittance basis - 
Paying tax on the remittance basis (Self Assessment helpsheet HS264)
Thank you. 

It does not say about any charge for remittance basis, if I’ll get £10000 do I have to pay any fee for remittance basis? Some websites say that it’s £30k… Also, where do I get UTR number from? I only have NIN number.

I’m also part-time employed in the UK, will this affect me somehow? I’m just trying to find the best solution to save money, as it’s not much.

Hi  sbbrk

The 30k you refer to is the remittance basis charge - RDRM32210 - Remittance basis: accessing the remittance basis: long term UK residents: long-term residents and the remittance basis charge - overview.
to get a UTR, you eed to register for self assessment - Self Assessment tax returns

Thank you
 

Hi,

As your UK income will use your personal allowances, any other income you receive will be taxable at your marginal rate.

Thank you.

Will I have to pay remittance basis charge in my case? And how is it paid?

Hi sbbrk,
Please refer to guidance at:-
RDRM32390 - Remittance basis: accessing the remittance basis: remittance basis charge - nomination of foreign income and gains: payments on account - interaction with the remittance basis charge (RBC)
Thank you.