UK tax on US interest income?

I brought up this issue in another thread, but wanted to break it out on its own.

Sara, you mentioned that non-UK income such as interest on US bank accounts may be taxable in the UK (provided it is over 2000 GBP, etc).

However, my understanding was that if we were not permanently "domiciled" in the UK, that our overseas investment income would not be taxable here (as long as it is not remitted here). I am basing this on the info I found on the following site:

http://www.americanexpats.co.uk/taxes.htm

Particularly:

Normally an individual who was borne outside the UK and intends to return permanently to a country other than the UK is regarded as not domiciled in the UK for tax purposes.

This can have a number of tax advantages in the UK such as:

Overseas investment income is not taxable in the UK as long as it is not remitted here,
Overseas capital gains are not taxable in the UK as long as the proceeds are not remitted here,
Home leave trips paid for by an employer are not treated as taxable income in the UK,
Contributions to a US 401k plan will be deductible in the UK, and contributions to such a plan by an employer will not constitute taxable income (there are some conditions to be satisfied, though the general principle should apply).
Social Security

Suppose, for example, that we have 5000 GBP of US interest income which we do NOT remit to the UK.

Since my husband and I have three-year visas, and intend to return permanently to the US, does that mean we are NOT "domiciled" in the UK? And therefore, is our US interest income exempt from UK taxes? Must we still give up our personal allowance in order to exempt this non-UK income from UK taxes?

Thanks for any further clarification you (or anyone else) can provide! 

Since my husband and I have three-year visas, and intend to return permanently to the US, does that mean we are NOT "domiciled" in the UK? And therefore, is our US interest income exempt from UK taxes? Must we still give up our personal allowance in order to exempt this non-UK income from UK taxes?

Yes, you would be considered not UK domiciled.  In the past, it was as simple as saying as long as non-UK income was kept outside the UK, it would not be taxed in the UK.  This is no longer the case.  As I explained in the other thread, now, if you want to exclude non-UK income from UK taxation, you must give up your personal allowance.  the exception is if the non-Uk income is less than the £2k.

Thems the (new) rules.  In short, the link is well outdated.

Sara is of course entirely correct.

In this scenario one would treaty resource the US interest of £5,000 as foreign source on Form 1116 so the US would give credit for the UK tax on the interest income.

Alternatively one would split income between spouses or invest in growth oriented stocks to keep non-UK income below £2,000 per spouse per UK tax year.

Sara and guya, thanks to you both for clearing this up. Very good information to know!