Tax Guide: UK Tier 1 Investor programme – UK Tax Issues 1 - Page 2

1 . What is UK Tier 1 Investor Programme ? UK Tier 1 Investor programme allows a non-EU national to acquire the right to reside in the UK where they have funds available to invest in the UK . The visa requires the individual to invest a minimum of £ 2 million in UK government bonds , shares in certain UK listed companies . After five years of satisfying these conditions , the individual can apply for permanent residence in the UK .
2 . UK resident Individual who is not resident in the UK is subject to UK tax on UK source income alone . They do not pay UK tax on non-UK source income or capital gains . Income and capital gains that arise before you become UK resident will never be taxable here , even if you bring them to the UK after your arrival , provided you have separated income & gains earned prior to arrival into a separate bank account .
It is therefore important to take advice before your arrival in the UK to ensure that you have established capital funds and properly separated them into clean capital bank account before your arrival .
You do not become resident in the UK for tax purposes simply because you have qualified for the investor visa . There are detailed and complex legislative rules which set out the factors to decide your residence status and you should take advice to determine the date on which you will be treated as taking up . For further detail see Tax Guide : Non-UK domiciliary Looking To Be Resident In The UK .
3 . Tax implications The tax implications of moving to the UK also depend on an individual ’ s country of domicile . Domicile is a concept of UK general law that applies for a number of purposes in addition to taxation .
An individual is very broadly , domiciled in the country that constitutes his permanent home . At birth an individual acquires a ‘ domicile of origin ’, normally from his father . This may be displaced by a ‘ domicile of choice ’
Any individual who is tax resident in the UK but is domiciled outside the UK is entitled to use the special basis of taxation known as the remittance basis . The essence of this is that although UK income and gains are immediately taxable , non- UK income and gains are not taxable , unless and until the relevant proceeds are brought into the UK .
Generally , the remittance basis must be claimed in tax returns , and for longerterm UK residents there is typically a " fee " that must be paid if the remittance basis is to be used .
Where an individual intends to become resident in the UK as a remittance basis user , it is important that he / she takes expert tax advice regarding " pre-arrival "