Quote from zentrader:
Thinking about spending a few years in the UK and am wondering if there is any way I can set myself up with an offshore company/trading account so I will only have to pay tax on gains remitted to the UK.
From research so far, my understanding is that if I fully control and operate an offshore company from within the UK I will be liable to pay tax on worldwide profits.
If anyone has been through this and found a solution, your feedback would be appreciated.
Non-domiciles do not have to pay tax on overseas earnings. So if you setup an offshore account you will pay 0% if it's kept out of the UK. But companies that have "management and control" - such as you trading while you live here - in the UK usually will be classed as UK companies. There are two ways to avoid this - trade under your personal name, through a non-UK broker and trading mostly in non-UK markets. You'll then qualify for the non-dom overseas exemption. Or, use an offshore tax-haven management company to set up a virtual office, hold board meetings overseas etc. As a non-UK citizen this would usually de facto be enough to establish non-UK management and control over your company. Technically you might get taxed but the real world chances are almost zero unless you become a long-term (e.g. 5-10 years+ UK resident), even then it's unlikely. Also, the liability even if you lost a tax case would be corporate, not personal, so you would not face personal tax debts.
However, a recent change in the law means that to claim the non-dom loophole, if you reside here long enough (can't remember exactly but it's several years IIRC) you have to pay a £30k per annum tax (similar to Switzerland which will let you pay 50k Euros and then no tax above that - good for high earners), OR pay normal UK tax rates on remitted earnings. So, if you plan to trade under your own name, and live here long enough, you need to be earning a reasonable income in dollar terms to justify trying to claim the loophole. This is to avoid any foreigner just paying no tax at all while living here long-term and using public services etc. Thus the "offshore managed" non-UK company may be the more attractive approach. Up to about £32k sterling, tax rates are not onerous (somewhere in the high teens % if I recall) but above that it gets to 40% on each marginal pound earned, so pretty high. If you have savings then just live off those (which is tax-free) to supplement the 32k you remit each year, if necessary. You can work out the equilibrium remitted income per annum at which you would be better off paying the £30k flat tax than normal UK tax rates. E.g. if you are a big spender and remit £200k, your tax liability would be about £74k - the flat tax of £30k for non-doms would be vastly superior. At £90k ($175k) it's roughly equal. Remember this is only if you stay here long-term. First few years you can claim it and pay zero income tax.
Obviously you should take all advice on ET with a pinch of salt and speak to a tax barrister specialising in non-dom stuff if you are serious about this. However, I did just that a few years ago and this is basically the advice I got.
