Having recently returned from a family holiday on an idyllic Greek island, I found myself considering the ‘vacation versus staycation’ debate for the non-UK-domiciled HNW resident in the UK.
With glorious weather (aside from the compulsory downpours which make the ‘Glastonbury Gloop’ mud so special), reports of dolphins frolicking in the waves off the cost of Cornwall and claims that the UK is home to the best beach in Europe, it must be a hard decision for the many non-UK-domiciled individuals to tear themselves away from this fair isle.
Well, perhaps not so hard for those in the process of renewing their investor visas whose passports are themselves lingering somewhere between London, Liverpool, Belfast, Durham, Glasgow, Newport and Peterborough courtesy of HMPO (unless of course, they stumped up for the super premium service).
Or indeed for those who are in the process of applying for British citizenship and who will need to consider their day count carefully to avoid jeopardising their application to the Home Office, as will those who need to prove to the revenue authorities in another jurisdiction that they are not resident there.
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For those, however, who can resist the allure of the English summer, there are good reasons to wave goodbye to the white cliffs of Dover from the foredeck of the new superyacht. Particularly as for non-UK-domiciled remittance basis users, it is an opportunity to spend some of that hard earned foreign income (or gains) which would otherwise be taxable if remitted to or enjoyed in the UK.
But even so, care regarding form and nature of the purchases must be exercised. If, while mooring in Cannes, you stroll along the Rue D’Antibes and fail to resist temptation in one of the many jewellers or exclusive designer boutiques, any purchase can be brought into the UK free from tax, even if you later pay your credit card bill from your foreign income or gains.
The reason is that clothing, footwear, jewellery or watches that are for the personal use of the individual taxpayer, their spouse or civil partner, minor child or grandchild can be brought into the UK without triggering a taxable remittance.
The same does not however apply to other souvenirs or trinkets in the form perhaps of carpets or lamps, statues or artwork (unless within the de minimis limit – less than £1,000 or works of art imported for sale or repair or within the temporary importation limits).
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Of course, for those who wish to avoid worrying about UK residence and the remittance basis altogether, an extended sojourn could prove very useful if day count was becoming an issue. Depending on their residence status, the cruise might have to extend beyond the summer. If you are neither automatically UK resident nor automatically non-UK resident under the statutory tests the position is as follows for individuals who have not been resident in any of the last three years (‘arrivers’):
UK days
Permissible UK ties (ie family, accommodation, work, 90 day rule or attachment with another jurisdiction) without becoming UK resident
Up to 45 days
Automatically non-UK resident (the ‘UK ties’ test is not relevant)
46 to 90 days
Can have up to three UK ties and still not be UK resident.
91 to 120 days
Can have up to two UK ties and still not be UK resident.
121 to 182 days
Can have one UK tie and still not be UK resident.
183 days+
Automatically UK resident (the ‘UK ties’ test is not relevant)
The position is slightly different for individuals who have been UK resident in one or more of the last three tax years (‘leavers’):
UK days
Permissible UK ties without becoming UK resident
Up to 15 days
Automatically non-UK resident (the ‘UK ties’ test is not relevant)
16 to 45 days
Can have up to three UK ties and still not be UK resident.
46 to 90 days
Can have up to two UK ties and still not be UK resident.
91 to 120 days
Can have one UK tie and still not be UK resident.
121 to 182 days
Must have no UK ties if UK residence is to be avoided.
183 days+
Automatically UK resident (the ‘UK ties’ test is not relevant)
Needless to say, if maintenance of a non-UK domicile is an issue, then an extended trip to see friends and family in your country of origin (or choice) would be no bad thing. Perhaps a rendezvous with friends at that foreign tennis or yacht club where you maintain a membership, a visit to the family burial plot might be in order, given that your firm intention is ultimately to return to that distant land one day.
I feel the need for another holiday already.Sophie Mazzier is counsel at boutique private wealth law firm Maurice Turnor Gardner LLP
