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Protecting The UK Tax Base

Whilst the SRT rules provide greater certainty for taxpayers about when a person is tax resident of the UK, the rules are also clearly aimed at those who have been living outside the UK in a low or no tax jurisdiction whilst travelling to the UK on a regular basis and enjoying many of the benefits of life inside the UK whilst minimising their tax.

If you take the example of the Isle of Man, which is only a 1 hour and 10 minute flight from London, the country imposes income tax at a rate of 10% on the first GBP 10,500 of taxable income and 20% on the rest.Plus, the Isle of Man does not impose capital gains tax, wealth tax, stamp duty or inheritance tax.If you are wealthy or if you want to pay less tax, then residing in the Isle of Man or Jersey or Guernsey might be a strategy you could consider.

If you were living in one of those jurisdictions and spending a significant amount of time in the UK on a regular basis, then you would need to be familiar with the SRT rules so as to ensure that you didn’t become tax resident and thus exposure your worldwide income to tax in the UK.

For most Australian expatriates moving to the UK, there is no issue about trying to avoid tax.That being the case, the SRT is beneficial in that it provides a very detailed set of rules about when you will become tax resident of the UK and in most cases, it should be fairly straight forward to determine when you are going to be regarded as tax resident of the UK.