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

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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. 6.25 Scope of liability to income tax on individuals receiving investment income Residence status and domicile Resident and ordinarily resident, and domiciled Resident and ordinarily resident, not domiciled Resident but not ordinarily resident, domiciled resident but not ordinarily resident, not domiciled Not resident but ordinarily resident, domiciled Not resident but ordinarily resident, not domiciled Not resident and not ordinarily resident, domiciled Not resident and not ordinarily resident, not domiciled Investment income arising in the UK Liable Liable Liable Liable Liable 2 Liable 2 Liable 2 Liable 2 arising outside the UK Liable Liable, remittance basis may be claimed 1 Liable, remittance basis may be claimed 1 Liable, remittance basis may be claimed 1 Not liable Not liable Not liable Not liable UK Government ‘FOTRA’ securities (see paragraph 6.7) Liable Liable Not liable Not liable Liable Liable Not liable Not liable 1. You are taxable on the whole of the income arising in the Republic of Ireland for all years up to and including 5 April 2008. 2. See Chapter 9 about possible relief under a double taxation agreement. IR20 36 HMRC 03/09
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. 7 Tax allowances and reliefs Allowances for UK residents 7.1 If you are resident in the UK, you are entitled to certain allowances and reliefs, based on your personal circumstances, which reduce the amount of tax charged on your income. However, from 6 April 2008, if you are resident in the UK and • not domiciled in the UK and/or not ordinarily resident in the UK • have £2000 or more in unremitted overseas income and/or gains • are using the remittance basis – see paragraph 5.12 the legislation removes your entitlement to UK allowances and reliefs under domestic law. 7.2 UK residents who are employees have tax deducted at source from their wages or salaries under the ‘Pay As You Earn’ (PAYE) system. The employer deducts tax on the basis of code numbers issued for each employee by HM Revenue & Customs. These codes take account of the tax allowances and reliefs to which each individual is entitled. For more details, ask your Tax Office or HM Revenue & Customs Enquiry Centre. From 6 April 2008 onwards, some people who use the remittance basis will not be entitled to UK personal tax allowances (see paragraphs 5.12 & 7.1). If you are not entitled to tax allowances because you use the remittance basis and you are continuing to receive them through the PAYE system, you will not be paying enough UK tax. You will need to complete a Self Assessment Return which will allow us to ensure that any tax you have underpaid is collected. Allowances for non-UK residents 7.3 If you are not resident in the UK, you may claim tax allowances if you are any one of the following • a Commonwealth citizen (this includes a British citizen) • a citizen of a state within the European Economic Area (EEA), i.e. a citizen of a Member State of the European Union, Iceland, Liechtenstein or Norway (this includes a British citizen). For more details see 11.1 • a present or former employee of the British Crown (including a civil servant, member of the armed forces, etc.) • a UK missionary society employee • a civil servant in a territory under the protection of the British Crown • a resident of the Isle of Man or the Channel Islands • a former resident of the UK and you live abroad for the sake of your own health or the health of a member of your family who lives with you • a widow, widower or the surviving civil partner of an employee of the British Crown • a national and/or resident of a country with which the UK has a double taxation agreement which allows such a claim. Allowances for those coming to, or leaving, the UK part way through a tax year 7.4 If you either become, or cease to be, resident in the UK during a tax year, you will be able to claim full allowances and reliefs for the year of arrival or departure (subject to 7.1 above). IR20 37 HMRC 03/09
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