IR20 - Residents and non-residents liability to tax in the United ...

This guidance does not apply from 6 April 2009. The guidance it contains is replaced by the
guidance provided in HMRC6 – Residence, Domicile and the Remittance Basis. It is kept
available for those people who need to make reference to IR20 for their tax affairs before
5 April 2009.
domiciled within the UK is deemed to have taken place on 1 January 1974 for the
purpose of determining her domicile on or after 6 April 1976 for UK tax purposes.
4.7 From 1 January 1974 your domicile is not necessarily the same as your husband’s
domicile. It is decided by the same factors as for any other individual who is able to
have an independent domicile. If, however, you were married before 1974 and had
acquired your husband’s domicile (see paragraph 4.6), you retain this after 1 January
1974 until such time as you legally acquire a new domicile.
Overseas electors
4.8 From 6 April 1996 registering and voting as an overseas elector is not normally taken
into account as one of the factors for determining whether you are domiciled in the UK,
for the purpose of establishing your tax liability here.
Tax treatment of those not domiciled in the UK
4.9 Those who are resident in the UK but not domiciled here receive special tax treatment
in respect of income and gains arising outside the UK. For details, see paragraphs 5.12
and 6.2 (income tax) and 8.8 (capital gains tax). We will consider the question of your
domicile only where this will affect your current tax liability.
For inheritance tax purposes, see booklet, ‘Customer Guide to Inheritance Tax’.
Part II Liability to UK tax
5 Earned income
Basis of liability
5.1 Finance Act 2008 introduced some new rules for remittance basis users, so for claims
and remittances after 6 April 2008 you will need to consider whether these new rules
(which are outlined in this chapter – particularly at 5.12) will apply to your
circumstances.
If you are resident in the UK under the rules in Part I of this booklet, you will normally
pay UK tax on all your earned income, wherever it arises. This is called the ‘arising
basis of taxation’. As well as earnings for employment, earned income includes items
such as pensions and income from a trade, profession or vocation. You may, however,
be entitled to a reduction in the UK tax you have to pay if you receive overseas earnings
and spend long periods abroad (see paragraphs 5.9 - 5.10) or if you receive an
overseas pension (see paragraph 5.11). In certain cases where you are resident but not
ordinarily resident in the UK, or resident but not domiciled here, we may deal with
your overseas income on the ‘remittance basis’ (see paragraphs 5.9, 5.11 - 5.12).
5.2 If you are not resident in the UK, we will generally tax you on any UK pensions or on
earnings from employment the duties of which are carried on in this country. Where
your duties are carried on partly in the UK and partly abroad, an allocation, based on
days worked in the UK and days worked abroad, will normally be made to ascertain the
earnings for duties carried on in this country which are liable for UK tax. We will not tax
you on earnings from an employment which is carried on wholly abroad (see paragraph
5.5). See paragraph 5.4 for the position if you become resident in the UK part way
through a tax year and 5.9 regarding overseas earnings taxable on the remittance
basis. In some cases you may make a claim under a double taxation agreement for
exemption from UK tax on your UK pension, or on earnings arising in this country (see
IR20 18
HMRC 03/09