Tax law changes for expats after 7 years -- anyone know status?

Hi -
I remember a thread late last year about some proposed changes to the UK tax law. It was something like after having lived in the UK for 7 years, an expat would being to be taxed on worldwide income.

Anybody know the status on that? If i remember correctly, projections were it would go into law this month (april 2008).

Also, IF it is happening, what happens if we live in the UK for 10 years and then go back to live in the US? Would we still have to pay UK taxes on income arising in the US?

Thanks much,

Clarelynn

Yes, this was confirmed in the 2008 budget. Once here for 7 years, non-doms can either pay £30,000 in order not to have to disclose their worldwide income, or they will have to pay UK tax on it.

As this is based on residency, if you go back to the US, you would not be liable for UK tax on US income. Unlike the US that taxes based on citizenship regardless of residency.

This is my understanding at least. Someone please correct me if I'm wrong.

Kate - you are almost right,

Anyone who wishes to claim the remittance basis loses the UK personal allowance & annual UK CGT exemption.

If you have been UK resident for 7 out of 9 years you will also have to pay £30,000 a year to claim the remittance basis.

During those first 7 years it is simply a mathematical test; will you be better off claiming the UK personal allowance & annual UK CGT exemption or - alternatively - reporting worldwide income in the UK.

Thanks, guya.

Now what happens if you leave the UK (let's say for 2-3 years) and then return to the UK as a resident. Does your clock re-set?

How does this effect an expat if they only receive income in the UK?  I am assuming it doesn't, but, wanted to check.

Thanks, guya.

Now what happens if you leave the UK (let's say for 2-3 years) and then return to the UK as a resident. Does your clock re-set?

As Guya said, the rule is 7 of the last 9 years so you'd have to be out of UK for 3 years for clock to restart. 

Here's an example where you would have made 7/9 test in 2011 as you were gone for only 2 tax years (08 & 09):

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
  -      UK    UK    UK    UK    UK     -       -      UK    UK

Here's an example where you would have made 7/9 test in 2016 as you were gone for 3 tax years (07-09):

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
  -      UK    UK    UK    UK      -     -       -        UK    UK     UK   UK    UK    UK    UK

I assume you have to be gone for the ENTIRE tax year so you could be gone for nearly 4 years but still not reset the clock.  For example, if you moved to the US in May 2008 and returned in March 2012 you would still have taxes in 2008-09 year and 2011-12 year.  This means you were gone for only 2 tax years even though you were gone for 3 years 10 months.   

Guya, can you confirm you must miss entire tax year?

How are the years counted? Does it go by number of days, weeks, months, or years?

I.e., if I spent 5 months (say May through Sept) in the UK and 7 months in the US, does that year count towards resetting the clock?

Wondering if there's someplace on the internet, something in reasonably plain English?

Thanks,

A partial UK tax year counts, unless you filed as a UK nonresident in that partial year.