Expatriate taxation - CIOT - The Chartered Institute of Taxation

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CIOT RESEARCH PROJECT ON EXPATRIATE TAXATION ITEPA section 689. 3.16 A logical conclusion would appear to be that, in the absence of clear guidelines to the contrary, the bonus should be for a period during which duties are performed in the UK if the cost of that bonus is allocated to the UK entity which is able to claim an income/corporate tax deduction for the payment. The OECD are known to favour the connection between a corporate tax deduction and a personal income tax charge for the earnings, and this was borne out in the debate over Article 15 of the OECD model treaty. Peter Ashby 20 6.2.07
CIOT RESEARCH PROJECT ON EXPATRIATE TAXATION 4 Issue 4: Domicile: general 4.1 The obvious issue is the lack of a statutory tax definition for the expression “domiciled in the UK” and, of course, the opposite “not domiciled in the UK”. 4.2 This status has considerable relevance to the amount of tax that an expatriate has to pay in the UK. The status is nearly always needed to be determined in order to file a tax return, and is often critical, as it affects the taxation of many sources of income and capital taxes. For example, it affects employment income, investment income from non-UK sources, capital gains from non-UK situs-assets and Inheritance Tax (until the deemed domicile rule of 17 years in the last 20 kicks in). A detailed list follows: a) Income tax charge on certain share scheme benefits (does section 421E apply to ITEPA section 21) b) Foreign employment contracts (ITEPA section 21) c) Self employed partners in partnerships with no PE in the UK (ITTOIA section 857) d) Travel Expenses of non-UK domiciled employee (ITEPA section 373) e) Travel expenses of spouse and children (ITEPA section 374) f) Pension Scheme deductions eligible for relief under the grandfathering provisions (FA2004 Schedule 36 paragraph 51) g) Dividend Income from non-UK companies and OEICs, etc h) Rental Income from non-UK property (ITTOIA 2005 Part 3 Chapter 11) i) Interest from non-UK banks, non-UK corporations and entities j) Purchased life annuity payments k) Personal Portfolio bonds l) Pensions from foreign pension plans m) Capital gains on non-UK situs assets n) Capital gains by trusts created by non-domiciled settlors o) Capital gains on capital payments received from non-resident trusts with capital gains p) Creation of non-UK resident trust by UK domiciled settlor (TCGA Schedule 5) NB note the difference where there is property added by a non-UK domiciled but resident settlor to a non-resident trust (TCGA 1992 Schedule 5 paragraph 2) q) Inheritance tax on non-UK situs assets r) Transfer of assets overseas to avoid UK tax s) Royalties and Copyright t) Deep discounted securities u) Foreign social security benefits (if taxable in UK) (ITEPA section 679) v) Transfer of assets abroad to prevent income tax (ICTA1988 sections 739 and 740) Applicable law 4.3 None, in as much as domicile is not defined in tax statute. Peter Ashby 21 6.2.07
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Expatriate taxation - CIOT - The Chartered Institute of Taxation

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