"Non-dom" doubts

[Counterspell]

I'm a Spanish citizen residing in the United Kingdom since last year. My parents are also from Spain and live there. I understand that therefore I'm a "non domiciled", and I would like to ask some questions.

1. I trade options on the US stock market. To be able to pay taxes on remittance basis, do I have to use a non-UK broker or is it enough with trading non-UK products in a UK broker?
2. Can I remit just some of the capital gains or income produced by trading, or do I have to remit everything or nothing?
3. If I can remit part of the winnings, would they be considered as income if trading is what earns me more money, even if I don't trade very frequently?
4. I have read that my parents, who were born and live in Spain, can gift me any amount of money without me having to pay any taxes. Does the money have to be sent to a non-UK bank account, or could it be sent to a UK account? If it can be sent to a UK account, can I then send it to my foreign broker to be able to produce tax free winnings? Do I have to notify the HMRC if I receive a gift, even if it's tax free?
5. Would I be asked to pay any taxes from my trading winnings kept abroad if I become a resident of another country and deposit the money in a bank account of that country?

Thank you very much in advance.

 

[DionysusToast]

I'm a non dom.

It doesn't matter where your broker is, it doesn't matter where the money is, only where you are.

I'd go for a US broker personally you can fill out a W-8BEN when you open the account and you will not be subject to US taxes.

There used to be lots of small private banks in Isle of Man. I was with Cater Allen bank until they got brought by HSBC and they created HSBC Offshore. I use Standard Bank now. The parent company is South African but you can get an offshore account in Isle Of Man.

So you can have a US Broker with no tax burden in the US, a bank account in Isle Of Man with a Visa Debit card and you can easily send $$$ to UK if you bank there too.

Your next step is to speak to an accountant to figure out the details.

 

[Counterspell]

I'm a non dom.

It doesn't matter where your broker is, it doesn't matter where the money is, only where you are.

I'd go for a US broker personally you can fill out a W-8BEN when you open the account and you will not be subject to US taxes.

There used to be lots of small private banks in Isle of Man. I was with Cater Allen bank until they got brought by HSBC and they created HSBC Offshore. I use Standard Bank now. The parent company is South African but you can get an offshore account in Isle Of Man.

So you can have a US Broker with no tax burden in the US, a bank account in Isle Of Man with a Visa Debit card and you can easily send $$$ to UK if you bank there too.

Your next step is to speak to an accountant to figure out the details.

Thank you for your reply.

What do you mean with "It doesn't matter where your broker is, it doesn't matter where the money is, only where you are."? Don't I have to keep the money abroad, and therefore use a foreign broker? I'm currently using Interactive Brokers, but it seems to me that the money is in the UK, as when I have deposited they asked me to transfer the money to a UK bank account.

And, about using an Isle of Man bank account and card, I understand that you mean withdrawing money at ATM's to spend it here, instead of "officially" remitting it. That's not allowed and I'd like to make everything legal. Anyway I wouldn't need more than 32010 pounds per year, and that income is taxed at a somewhat reasonable 20%.

 

[DionysusToast]

You don't have to keep the money abroad.

A lot of expats continue to get paid into the UK, even though they are not resident. As they are not resident, they aren't subject to taxes.

Most people declare an income in the country they are resident but you keep the bulk of it elsewhere.

In terms of offshore banking, you tend to get a better service than if you kept the money in an high street bank. When you call an offshore bank, they understand you can't "pop in" to the branch and they are geared up to help you if for instance, you happen to be in a country for a few days and you lose you debit cards.

I've once had new cards delivered to a hotel in Tokyo in 24 hours. Can't imagine Barclays doing that.

 

[Counterspell]

You don't have to keep the money abroad.

A lot of expats continue to get paid into the UK, even though they are not resident. As they are not resident, they aren't subject to taxes.

Most people declare an income in the country they are resident but you keep the bulk of it elsewhere.

I'm not from the UK residing in another country, but from Spain residing in the UK, so it's the UK where I pay taxes.

Most people declare an income in the country they are resident but you keep the bulk of it elsewhere.

That's the idea, trading in a foreign broker and keeping the money out of the UK, so I don't have to pay for me winnings unless I remit them. Is that correct?

 

[mcclaine]

I'm not from the UK residing in another country, but from Spain residing in the UK, so it's the UK where I pay taxes.



That's the idea, trading in a foreign broker and keeping the money out of the UK, so I don't have to pay for me winnings unless I remit them. Is that correct?

You are resident in the UK, so will pay taxes on your global income and gains in the UK (subject to the application of any double tax avoidance agreements and any credits you get in the UK for taxes paid elsewhere). However, as an exception to this rule, if you are resident in the UK but are also a non-dom (i.e. where you, are in your case, a Spanish citizen who is presently tax resident in the UK but you maintain that it is not your intention to permanently reside in the UK in the foreseeable future), income and capital gains earned by you on investments held outside the UK will not be taxed in the UK as long as you don't remit such gains back to the UK.

So, if you used a non-UK broker (into whose non-UK bank account you deposit money) and bought non-UK securities on which you made gains, it is possible to state that your gains have been earned on iestments outside the UK. To prevent such gains from being taxed in the UK, you will need to withdraw from your brokerage account into a non-UK bank account in your name. When you then remit money from this non-UK account into a UK bank account (if you do so at all), you will need to pay tax on such remitted gains.

However, note a couple of things:

1. You benefit from the non-dom rules only for your first seven years of your residence in the UK. After that, you can choose to continue benefiting from the rules only if you pay the HMRC a flat GBP30,000 non-dom tax, so won't b worth doing for most people unless their tax savings in retaining non-dom status is more than GBP 30,000. See Non-dom status: do you qualify? - Telegraph

2. I am not a tax lawyer, this is based on my generalist reading of various articles, so you should definitely get specialist advice.

Best of luck!

 

[Counterspell]

Thank you very much, mcclaine, it seems like it works as I thought.

Now I only need to find a non-UK broker that offers options on US leveraged ETFs I've asked Interactive Brokers and they have told me that the money that I have in their account it's considered that it is within the UK, so it doesn't work for me.

 

[Counterspell]

Maybe it isn't that easy:

"What about profits for an overseas share trader?

The remittance basis can also apply to the trading profits of an overseas share trader provided they're overseas trading profits.

However establishing the profits as profits from an overseas trade is not straightforward. You need to be able to establish the profits as arising from 'a trade carried on overseas

If you carry on the trade from the UK and actively buy and sell shares from the UK it's difficult to argue that the trade was carried on overseas. HMRC would usually look at where the key revenue generating activities are located. If this is the UK the trade would be carried on from the UK and the remittance basis wouldn't apply. "

"For share traders though they need to show the trade being actively carried on overseas. This is best established by actually arranging for the execution of buy and sell orders whilst you are overseas.

Alternatively you would need to show other individuals based overseas who actually carried on the trade (eg overseas brokers or investment agents). "

 

[NVP]

and the little matter of being profitable as a trader to pay any tax in the first place .....

N

 

[Cocoz]

It doesn't matter where your broker is?
It matters where you trade from.
If you are based in the UK and trade from there you technically can't claim to be taxed on the remittance basis.
Then if you do that and don't get caught it's a different story

 

[Splitlink]

Thank you for your reply.

What do you mean with "It doesn't matter where your broker is, it doesn't matter where the money is, only where you are."? Don't I have to keep the money abroad, and therefore use a foreign broker? I'm currently using Interactive Brokers, but it seems to me that the money is in the UK, as when I have deposited they asked me to transfer the money to a UK bank account.

And, about using an Isle of Man bank account and card, I understand that you mean withdrawing money at ATM's to spend it here, instead of "officially" remitting it. That's not allowed and I'd like to make everything legal. Anyway I wouldn't need more than 32010 pounds per year, and that income is taxed at a somewhat reasonable 20%.

I traded with IB (UK) but let my account lapse. It had about 60 quid in it at the time and they were charging 10 per month account maintenance. Anyway, that's another story. The end result was that they emailed me, saying that if I did not claim the money it would go to some US state--Virginia, I think.

I mention that because this thread has raised the question "Why did it not go to the UK Treasury?

Don't ask me to make claims now. This happened years ago and is only an anecdote!