What are the tax implications of residence?
The tax implications of being resident in the UK depend in part on whether or not you are domiciled in the UK. The tax year runs from 6 April in one year to 5 April in the following year – 2019/20 runs from 6 April 2019 to 5 April 2020.
An international student who is resident in the UK will normally be entitled to UK tax allowances and income tax reliefs; these include the personal allowance for income tax and the annual exempt amount for capital gains tax. There is more information on personal allowances in the tax essentials section.
The following bullet points summarise your tax position in different situations:
- If you are UK resident and UK domiciled – you pay UK tax on all of your worldwide income and gains in the tax year in which they arise, regardless of whether the income and gains arise in the UK or overseas. This is the called the arising basis of taxation.
- If you are UK resident and not domiciled in the UK – yyou pay UK tax on your UK income and gains on the arising basis as above. However, you can choose to pay UK tax on your foreign income and foreign gains on either the arising basis or the remittance basis of taxation. In some cases, the remittance basis applies automatically.
There were different rules for these years and, if necessary, you are recommended to take professional advice.
Tax years after 5 April 2013
The table illustrates broadly how income and gains are taxed in the UK, depending on your residence and domicile status.
UK Domicile Status
|UK Residence Status||UK Income||UK Gains||Foreign Income||Foreign Gains|
|Resident||Arising basis||Arising basis||Arising basis||Arising basis|
|Non UK domicile||Resident||Arising basis||Arising basis||Arising basis or remittance basis||
Arising basis or remittance basis
The rules illustrated in this table is subject to different treatment provided for under the terms of a relevant double taxation agreement. There may be different treatment for particular types of income and gains.