Dual Citizen and Digital Nomad Taxation

[sherryd]

I am UK resident and citizen by naturalisation and have been digital nomad for past two years and I haven't been back in UK. Lived there 20 years.

I am also citizen of a small Southern African country with double tax treaty with UK, born and grew up there.
I am stock trading using UK brokerage. I still use everything UK though perhaps I shouldn't since I am not resident anymore.
I am trying to find the best possible setup with plans I might return to the UK and settle at some point in the future.

Can you please tell me your thoughts on this setup

1. Create a UAE Company thinking Rakez Freezone. Will then open a business account with Interactive Brokers in Dubai. They are my current broker, they said I need to open a UAE new business account and they can then transfer my stocks and money to UAE. I keep reading it might be difficult opening a business bank account under a Rakez Freezone licence, how about I open and just use a personal account? I will only make one or two monthly transaction. Can I not pay myself as salary or divident etc. Whats really the advantage of a business account in this scenario

2. If I return to UK after maybe two years, Is the best declairing myself non dorm? I am reading about remmitances but I cant find about how much you get taxed on amount you bring in UK. Also if I am still trading, wouldnt that nullify the non dom status? Like I need to be a passive investor?

3. Lets stay I stay abroad and decide to buy a property in UK, what are the implications later? Would it be best to buy under a trust, or company or best to avoid until I return then just buy it as a personal main residence.

4. Lastly. When I return (if I do) will I get taxed on the money I bring in? Is there a setup that is more tax efficient.

I am trying to think about best setup now and into the future though I understand things change often and frequently.

 

[Martin Everson]

You ask a lot of questions...lol

how about I open and just use a personal account? I will only make one or two monthly transaction. Can I not pay myself as salary or divident etc. Whats really the advantage of a business account in this scenario

Sorry what are you trying to achieve here? Makes no sense.

If I return to UK after maybe two years, Is the best declairing myself non dorm?

You can be entitled to non-dom status even if you are a UK passport holder. I think around 800 UK passport holders still have this status but its very rare. You would need to prove i.e you have no domicile in UK, that parents were born outside the UK and you have domicile and a new life elsewhere or sometime. In your case as a nomad for 2 years and having lived in the UK for 20 and naturalised you will have difficulties.

I am reading about remmitances but I cant find about how much you get taxed on amount you bring in UK.

Depends if its income or capital. Capital is not taxed but income is at usual UK rates.

Also if I am still trading, wouldnt that nullify the non dom status? Like I need to be a passive investor?

Best practice would be make investments passive as a non-dom. Again not sure you would get non-dom status. If a lawyer has checked with HMRC that you can be granted non-dom then all good I suppose.

Lets stay I stay abroad and decide to buy a property in UK, what are the implications later? Would it be best to buy under a trust, or company or best to avoid until I return then just buy it as a personal main residence.

No implications. If you buy under a trust or company and if you mean an offshore one you maybe liable for ATED annually depending on price of property. Best to avoid.

Lastly. When I return (if I do) will I get taxed on the money I bring in? Is there a setup that is more tax efficient.

No the money you bring it would be considered capital on your first day of residency. However you only left UK for a short while and it is not clear if you have established residency elsewhere hence you may be still considered UK resident for tax purposes.

You can use the below flow chart to see if you are still UK tax resident.

https://home.kpmg/content/dam/kpmg/pdf/2016/01/statutory-residence-test-flowchart.pdf

 

[sherryd]

"Working out your domicile​

Your domicile’s usually the country your father considered his permanent home when you were born. It may have changed if you moved abroad and you do not intend to return."

Above is what it says on uk.gov about non dom and since my African country is home to my father, I would think I can get it? I have no plans to permanently make uk home and intent to return back to my African home country in my later years.

Sorry that I asked many questions.

 

[fshore]

You are probably not UK tax resident (check the link above). So what problems are you trying to solve with UAE etc? Why can't you continue to use your personal IB account?

 

[sherryd]

You are probably not UK tax resident (check the link above). So what problems are you trying to solve with UAE etc? Why can't you continue to use your personal IB account?

Oh. Great question and am not so sure if I am creating problems that arent there. Just scared of tax man.

My brokers account I use to trade is UK based with my previous UK address. I thought this makes me liable for taxes or might give me complications in the future? Am I over complicating it since I havent been UK resident for 2 years. I am still using my UK banks as I have no other permanent adrress.

Do I need to notify UK gov that I am non resident? I can make my African country my main residence though I am there like three months a year.

I just feel a little uncomfortable having my money in UK that they might cause me problems in the future. I don't trust them. What if I return a few years later, will they not want to tax me? I prefer to have another account outside UK just as a hedge and so was thinking of UAE for that.

 

[fshore]

Not notifying banks about address change might break some rules or laws, but it won't make you tax resident if you are not according to the tax residency rules. Withholding taxes (on dividends from us equities etc) might change based on your residency.

UK is a reliable place to bank, I wouldn't consider UAE to be safer.
You should check if you can update the address on your current account to solve the address problem.

 

[khinkali]

@sherryd domicile has a number of nuances; there are four flowcharts in the RDR1 Guidance Notes that might help. 20 years in UK, 4 years abroad (at least 2 not living full time in your other citizenship country), then move back UK? I think this will be difficult.

Also consider that a residence gap of <5 years can make you resident for some UK taxes for the whole period.

I think you might want to stay outside the UK for >5 years, then crystalise your gains before returning. The offshore gains you bring back to UK should be UK tax free, and then you are taxable again when you resume living there.

On the other hand, tax rules could change in a few years and those changes might be retroactive. The UK might increase taxes on resident non doms, then follow the EU in imposing non resident citizenship taxes and wealth taxes.

 

[Martin Everson]

Do I need to notify UK gov that I am non resident?

If you worked in UK then you must let HMRC know by completing form P85 if I remember

What if I return a few years later, will they not want to tax me?

What you mean return? You never left as you may not have informed HMRC .

 

[sherryd]

Thank you all for the replies.

I would prefer to get my stock trading account in UAE rather than UK and have another account outside UK. I just have distrust that HRMC might require mountains of paperwork from me in the future if I continue with current setup on my return. I think I still want to persue the UAE option. It just gives me peace, but then maybe I am just overthinking it.

 

[Martin Everson]

think I still want to persue the UAE option. It just gives me peace, but then maybe I am just overthinking it.

There is no peace in the middle east...lol. Try Luxembourg or Switzerland for your brokerage if you want peace of mind.

 

[sherryd]

There is no peace in the middle east...lol. Try Luxembourg or Switzerland for your brokerage if you want peace of mind.

I am curious what you mean by this?

In your opinion, its better as it is now to continue trading with UK Interactive Broker and I just notify HRMC I am living outside UK?

I am trying to find a solution.

 

[Martin Everson]

I am curious what you mean by this?

Pull out a map of Dubai. Then look at its neighbors. Then work out your escape route from Dubai if things go wrong i.e if Iran and Saudi enter a hot conflict. Let me know how you plan on escaping. Which air, land or or sea route will you choose?

 

[JackAlabama]

There is no peace in the middle east...lol. Try Luxembourg or Switzerland for your brokerage if you want peace of mind.

Yeah better go to a place where you physically die of boredom but what is not good for your is great for your money.

 

[JackAlabama]

Pull out a map of Dubai. Then look at its neighbors. Then work out your escape route from Dubai if things go wrong i.e if Iran and Saudi enter a hot conflict. Let me know how you plan on escaping. Which air, land or or sea route will you choose?

Interesting take.
Dubai might be ok as probably both countries leaders stack their stash there, think of Switzerland and ww2.

I hope my boat will bring me to Phuket or at the very least Goa.
Alternatively for the very brave, I would suggest an escape by boat to the nice pirate land of Somalia.

 

[Martin Everson]

I hope my boat will bring me to Phuket or at the very least Goa.
Alternatively for the very brave, I would suggest an escape by boat to the nice pirate land of Somalia.

Would love to see you navigate the Strait of Hormuz in your boat. You can wave to the Iranian Revolutionary Guard Corp on the coast if they have not already surrounded your boat on the strait...lol. Basically Dubai would be a nightmare place to be stuck with no escape options in a conflict . Plus add to that a cowardly wife beating dictator that will likely use foreigners are human shields and you get the picture.

 

[JackAlabama]

Would love to see you navigate the Strait of Hormuz in your boat. You can wave to the Iranian Revolutionary Guard Corp on the coast if they have not already surrounded your boat on the strait...lol. Basically Dubai would be a nightmare place to be stuck with no escape options in a conflict . Plus add to that a cowardly wife beating dictator that will likely use foreigners are human shields and you get the picture.

true that. Better a conflict will not happen when being there.
Maybe the Iranians give me asylum if I ask nicely and make it to Kish by swimming