UK is a tax haven for non-domiciled people. This is the reason many wealthy Russians and other wealthy foreigners move to the UK and drive up house prices in the top end of the market. Non-domiciled people are people that are born overseas or have a father that was born overseas, although here you have to prove with HMRC that you have some ties with your domicile.

Non domicile people only pay tax on overseas income they remit to the UK. Overseas equity they had before moving into the UK can be brought in TAX free. If this equity is enough you can live in the UK virtually tax free. The same rule applies to Ireland, which makes this a great place for UK people to move to, to classify for non-domiciled status over there.

If you are like me having lived and worked in the UK and have some savings, you can have these savings paid gross to you by opening up an offshore savings account on one of the channel island or isle of man. Just make sure that you do not remit the interest part to the UK, as then you will pay tax on it. The best way to do this is by having 2 seperate accounts. One in wich you put your savings, you can easily move money in and out without getting taxed. You open up a second account in which you have al your interest income paid into. You can use this money as spending money for your overseas holiday trips. As you do not remit the money to the UK this is also TAX free. Some accounts pay 6.1%. A good list can be found here:

http://www.moneyfacts.co.uk/offshore/bestb...hore-fixed.aspx

Make sure when you open up the account that you mention that you want to get paid gross in exchange for information. This means the UK tax man will know about your account. The above solution is perfectly legal. The Non-domicile rule is one of the mean reasons the Sunday times rich list is full of foreign people.

Non-domiciles also have better tax breaks on overseas property investments. Especially when those countries have no capital gains tax. Lets say you bought a property in Dubai and you can sell it for a healthy profit. As there is no CGT in Dubai you can avoid UK CGT by not remitting the money to the UK. Or by remitting up to the threshold every year. It is good to open up a third account for your CGT profits. Also make sure that the income on this account is paid into an income account. This way you can keep capital, income and CGT seperated.

I am in the same situation. Trying to make the most of it, always on the legal side of course.

I can understand the basics of it. Things like taxable income only on a remittance basis, that sounds easy. But then things get too complex very quickly. Things like double taxation treaties, I am lost.
Say the example:
- Interest from a bank account in X country.
- Double taxation treaty between X and UK states that X can only charge 12% of the interests (for non-residents). Charge for residents is higher than 12%.

Going through the treaty, it seems that the low rate 12% is allowed because it is assumed that the UK Inland Revenue will charge the remaining up to the 20%, 40% rate. But if the income from the interests is not remitted to UK, then the Inland Revenue will see 0 of it? That's what I understand from the "remittance basis" rule, and from the offshore bank accounts in IoM, Guernsey...
Soldintime (or anyone), do you know if a non-UK domiciled can benefit from the low rate in X even if money is not remitted to UK?

I have read the book "Non Resident & Offshore Tax Planning", but I think I have to go through it again.

Offshore trusts and companies are way off my radar at the moment, but any good source of information on their benefits for non-UK domiciled would be appreciated.

Yes i read the book as well. Basically you are right if country X charges you less due to non resident status at 12% that is the tax you pay. The double tax treaty will only come in to place when you remit the money to the UK. As long as you don't remit you should only pay the 12% tax of that country. However if you had that money before you moved to the UK you can remit the equity free of tax, it is only the income that you need to be careful of. Hence why it is always best to have 2 accounts. One for the interest income and one for the equity.

6.41% now.

http://www.moneyfacts.co.uk/offshore/bestb...hore-fixed.aspx

On the flip side of the coin, in the UK a non-dom spouse does not qualify for wholly tax free inheritance of their domiciled spouse's estate.

The tax free limit in this situation I think is 55K and the rest is taxed.

Hi,

I am looking for an offshore account that offers flexibility in the withdrawals. For instance, AFAIK the Alliance & Leicester ones only allow withdrawals in excess of £1000, which is too much for me. Does anyone know accounts that accept smaller instant withdrawals?

Also, any advice in banks with low transfer fees? A & L charges £30 for transfer to euro accounts in continental Europe.

Finally, I read somewhere in the Internet that if interest generated offshore during tax year 07/08 is remitted to UK after that year (for instance during tax year 08/09) it will not be taxed as it will be considered capital and not income. Does anybody know whether that is true? This is for the UK resident non-dom case.