Tier 2, remittance basis, investing, other income

Hi everyone.
I was trying to get the combined immigration & tax advice on following topics.

1) As Tier 2 (General) migrant, can I claim the non-dom status and remittance basis of taxation? Can it negatively affect visa extension and ILR applications in future? Do you know anyone who succeeded with ILR while being non-dom on special tax treatment?

As far as I know, it should not be the problem for Tier 1 (Investor), but what about Tier 2?

2) As Tier 2 migrant, can I trade using overseas broker account? Can I freely trade currencies, bonds, stocks? All trades are going to be carried from personal account using my own money.

Some advisors believe it may be considered as "self-employment". If it is true, does it mean that all the high-paid executives (from USA \ Japan \ Australia) working in UK banks are effectively prohibited from managing their own finances?

3) As Tier 2 migrant, can I receive additional income from internet advertising? For example, what if I have a website passively generating 500 pounds a month. Is it a violation of immigration law to declare this income in tax return?

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At this moment, I am not involved in any of this. But I am trying to clarify all the possibilities and pitfalls beforehand.

Best regards

Tier 2 can not be Non Dom as you are a PAYE employee.

Stock market / bonds/ FX / investment products etc. As long as you are solely doing this as personal investment it is not self employment.

Internet advertising. That in my humble opinion is self employment as you have to generate the income by "doing" something for it to be generated. That is a business activity and is taxable. So on two front if you don't declare it that would potentially lead to tax evasion on one side and visa curtailment on the other.

Frontier Mole, thank you for reply.

Tier 2 can not be Non Dom as you are a PAYE employee.

OK, but what about Overseas Workday Relief? It is the relief basically designed for non-doms on remittance basis employed in UK.

Weblink removed by moderator

Full guidance:
https://www.gov.uk/government/uploads/s ... dr4_1_.pdf

Please also this link:
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Under Overseas Workday Relief (OWR) treatment an employer can apply under Section 690 ITEPA 2003 for a direction from HMRC to operate PAYE only on the percentage of the employee’s total earnings that are for work in the UK.
This applies to all payments made by the employer including termination payments and share based remuneration.
Under section 690 ITEPA 2003 they may then apply PAYE only to the proportion of their earnings that relate to UK work.

Tier 2 General forget it. You are Dom in the UK on full PAYE. There is no discounting on that one I am afraid.

If you were duel country based on ICT I could see the relief being considered.

I had an immigration advice from OISC Level 2 Immigration adviser based in the City of London.

Few key points:

1) Domicile is not related to visa types. Visa rules might change. Domicile definition might change (very rarely). Those things are not connected with each other.

More inforamtion on domicile related to immigration law is available here:
https://www.gov.uk/government/publicati ... cile-set15

2) As long as Tier 2 (General) migrant works for sponsor and pays income tax and national insurance from wages - he is OK. Domicile is not related to PAYE. In fact, most immigrants retain the domicile of origin. It is not that easy to obtain the domicile of choice in the UK.

3) All forms of personal investments are allowed (except owning more than 10% of sponsor shares unless your salary is more than 155k+). It includes UK investments and overseas investments.

4) It is even allowed to make your own Limited Liability Company and employ yourself. You should fulfil all relevant rules for second employment (pay yourself via PAYE, 20 hours max, same level of expertise, work completely outside of main sponsor business hours).

The last point was a big surprise for me. I'll try to learn more about it and share this information.

While there are a vast number of OISC registered individuals many give particularly poor advice.

Tier 2 General must be PAYE there are no ifs or buts on that score. There is no tax relief because you are an overseas migrant. For tax purposes under Tier 2 your are a domicile because if you were anything else you can't be a tier 2 general visa holder.
It might be helpful to actually look at the position HMRC take on domicile not that of UKVI. They are different.

Your point on owning your own company etc. Yes technically possible, never yet seen it achieved whiteout working in breach. The rules are so precise on following the exact SOC and job role it is virtually impossible to stay within the rules.

By all means have a go and I wish you well but expect a bumpy ride.

I think the OP is confusing what a non-dom is about. He is thinking that since his country of origin is diff, he can do other investments, make profit and not pay tax on it, while at the same time continue paying paye.

The advise you got from the adviser is total rubbish.

Just a clue for you, there are about 10k non-dom people in the uk, with people of nationality other than british in millions.. Make a guess why others are not going down the route of non-dom, and trust me when i say, there are hundreds of thousands of non-brits who have a lot of money with owning just their own business and not working paye.

Your understanding of non-dom is somewhat shallow.

No worries, I won't do anything unless 100% sure.
That's why I am here (and few other forums) - to listen different opinions and find out the truth.

Tier 2 General must be PAYE there are no ifs or buts on that score.

That's correct, no one denies it.

There is no tax relief because you are an overseas migrant. For tax purposes under Tier 2 your are a domicile because if you were anything else you can't be a tier 2 general visa holder.

It might be correct, but do you have anything to prove this statement? Even the smallest clue is fine.

Here is the HMRC guide on residence and domicile:
https://www.gov.uk/government/uploads/s ... ttance.pdf

I read it thoroughly and I could not find anything regarding to visas and immigration. In fact, there are 0 instances of word "Tier" in this document and only 2 instances of word "visa" (in tax residence test section).

This guide mentions that "domicile" is the term of general law. It is different from nationality and residence. The only specific thing relevant to tax law is the recent introduction of "deemed non-domicile status". Basically it means that individual cannot claim non-dom status for tax purposes after 15 years of continuous residence.

Your point on owning your own company etc. Yes technically possible, never yet seen it achieved whiteout working in breach. The rules are so precise on following the exact SOC and job role it is virtually impossible to stay within the rules.

That's exactly what I thought. How one can satisfy the SOC code requirements while being a director? I'll try to learn more about it and (ideally) find a few people who do this already.

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I think the OP is confusing what a non-dom is about. He is thinking that since his country of origin is diff, he can do other investments, make profit and not pay tax on it, while at the same time continue paying paye.

Again, why not? If you have anything proving it's not possible - I would be happy to look through evidence and agree with you. No sarcasm here.

Just a clue for you, there are about 10k non-dom people in the uk, with people of nationality other than british in millions.. Make a guess why others are not going down the route of non-dom, and trust me when i say, there are hundreds of thousands of non-brits who have a lot of money with owning just their own business and not working paye.

There are more than 100k+ non-doms in UK, according to Telegraph.
http://www.telegraph.co.uk/news/general ... rkers.html

I also saw more recent statistics obtained with help of Freedom of Information Act. I'll find it if necessary.

Why most of eligible people are not going the non-dom route? That's easy:

• 1) If you have the center of your life in UK - it does not give any benefits. You'll be taxed on the moment of remittance of income to UK.
  
  2) If your foreign income is relatively low - it does not provide benefits too. You lose the Income Tax and Capital Gains Tax allowance in UK when you claim the remittance basis. You need at least 10-20k pounds of income overseas to make it worth it.
  
  3) After 7 years of residence you need to pay a charge if you want to claim the remittance basis. It is whooping 30-50-70k per year. Foreign income should be really high to justify this charge.
  
  4) There is such thing as "automatic remittance basis". A lot of people are using it, not declare it and are not aware of it.

Look here:

9.15 If your unremitted foreign income and gains arising or accruing in the tax
year are less than £2,000, you can use the remittance basis without having to
complete a Self Assessment tax return. In this case you will:
 be automatically taxed on the remittance basis (unless the rules at
paragraph 9.11 apply)
 retain your entitlement to UK Personal Tax Allowances and to the
annual exempt amount for Capital Gains Tax
 not have to pay the Remittance Basis Charge (RBC) if you are a longterm
UK resident

Basically it means that if you are non-dom, got less than 2000 pounds income outside of UK and did not remit it to UK - HMRC won't chase you.

Small update on this.

I see the following part of HMRC guidance as being particularly interesting:
https://www.gov.uk/government/uploads/s ... ttance.pdf

What should you do if you have UK tax allowances and choose to use
the remittance basis?
8.9 If you decide during a tax year that you are going to use the remittance
basis and you are still getting UK personal allowances through the PAYE
system, you may not be paying enough UK tax.
8.10 If you contact us, we can arrange to amend your tax code to one which
does not give relief for personal allowances, thus reducing any potential tax
bill arising from you getting the benefit of allowances you are no longer
entitled to. Your employer can’t do this for you as your tax affairs are
confidential between you and HMRC. Until they receive a new tax code from
us, your employer will continue to deduct tax from you based on the code we
originally issued before you were claiming the remittance basis.

In my opinion, it completely proves the point that PAYE and remittance basis may be active simultaneously during the single tax year. What do you think?

And some more evidence.

1) weblink removed by moderator
The following part is especially interesting:

However, it is extremely difficult for a person to dislodge his domicile of origin because of two further rules. The first is that the standard of proof required to establish a domicile of choice is very high and is similar to the standard required in criminal law, namely "beyond reasonable doubt". The second is that if an individual does establish a domicile of choice in another country, and that domicile of choice is abandoned for any reason, their domicile of origin automatically revives to fill the gap. The domicile of origin then remains their domicile until they have a fixed and settled intention to acquire another domicile of choice.

2) weblink removed by moderator
The highlight:

3.4 It states in the foreword to the consultation that “The majority of non-domiciled individuals
who come to the UK leave again within a few years from the date they first arrive”.
It would be interesting to understand the statistical basis for this statement, since the exact number of UK resident non-domiciles is unknown. The vast majority of non-domiciled individuals do not complete tax returns, meaning self assessment declarations of non-domicile represent a fraction of the true number. For example, according to the Office for National Statistics, there could be in excess of eight million people living in the UK who are not UK nationals many of whom are also likely to be non-domiciled (the difficulties of losing one’s domicile of origin are well known through numerous court decisions). This represents a significant proportion of the population.

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I've found numerous sources of information mentioning that "domicile of origin" is very strong. Adviser said the same. I've managed to find some extreme info about children (brit citizens) of naturalised parents are still able to claim the domicile of origin of their father in some cases.

Still no evidence of particular visa types, work permits, PAYE to be affecting the domicile in any way. I am planning to get relevant tax advice in the upcoming weeks to conclude this topic.

Please refrain from posting weblinks for companies or naming companies in your topic.

My apologies! I was not aware of this rule. I'll be careful next time.

The second link was related to non-profit charity helping people on low-income and providing tax guidance. They do not charge for services and do not sell anything. They work closely with HMRC. Is it sill prohibited to refer to them?

Thank you.

Only official weblinks can be posted otherwise it is seen as the equivalent of advertising.

Latest update on this:

I received tax advice in City of London from adviser with 25 years of experience working with non-doms. I also had a meeting with person who claimed remittance basis on work-related visa in the past.

Both of them never heard about immigration status affecting the tax affairs in any way and vice versa. They also confirmed that non-dom status is no-brainer in my position due to domicile of origin.

I guess, I've exhausted all options confirming that remittance basis is possible for Tier 2 holders. However, to anyone reading this thread in future, please take your own immigration and tax advice before doing anything.

Rules are constantly changing, and you'll need to structure your assets \ accounts \ investments accordingly to take advantage of it anyway.

WRWR wrote:Latest update on this:

I received tax advice in City of London from adviser with 25 years of experience working with non-doms. I also had a meeting with person who claimed remittance basis on work-related visa in the past.

Both of them never heard about immigration status affecting the tax affairs in any way and vice versa. They also confirmed that non-dom status is no-brainer in my position due to domicile of origin.

I guess, I've exhausted all options confirming that remittance basis is possible for Tier 2 holders. However, to anyone reading this thread in future, please take your own immigration and tax advice before doing anything.

Rules are constantly changing, and you'll need to structure your assets \ accounts \ investments accordingly to take advantage of it anyway.

You need to make yourself aware of HMRC's very aggresive stance on tax these days, chance it, and Hector will rip you a new arsehole.

And if the goal is residency and not just to rip off the government just look in the ILR forum for the shit storm wrt to the slightest tax issue there.....