I'm a dual US/UK citizen and have lived in the UK for 4 years. I've previously claimed to be domiciled in the US.
Last year, I cashed a large sum of money in US government savings bonds, the vast majority of which was interest income. I kept some of this in the US and remitted some to the UK. My understanding has been that until I am here for seven years, I only have to pay UK tax on the income remitted to the UK, provided that I give up my personal allowance. My personal allowance would be much less than the income I left in the US so mathematically, based on the above, it seems like it would be better for me to pay on the remittance basis.
I also understand that once I am in the UK for seven years, if I chose to only pay tax on the remitted income, I would have to pay a £30k annual fee.
I wanted to make sure that if I chose to pay on the remittance basis this time, I wouldn't accidently lock myself into paying £30k a year in the future (which I could not afford) so I called a tax adviser who I had met with a couple of years ago.
The tax adviser advised me to pay tax on all of the income (including the income that I kept in the US) and deduct whatever I paid in US taxes as a credit.
That sounds a bit strange to me, and I'm wondering if either 1) he wasn't paying attention to me when I said I had only been in the UK for 4 years or if 2) by claiming on the remittance basis only, I would be locking myself into that forever and therefore locking myself into the £30k fee once I'd been here for 7 years.
Does his advice make sense? Should I seek a second opinion?
