LDF and Swiss-UK Tax Agreement
2.2 General Taxation of UK Individuals with Foreign Assets
The UK principles of taxation of individuals are different from the common systems in central Europe,
in particular the principles of residence and domiciliation. *! The UK tax system is built on two tiers.
Central government revenues are collected by Her Majesty's Revenue and Customs (HMRC) and con-
sist of income tax, corporation tax, value added tax, National Insurance contributions and fuel duty.
The second level is the local government, which covers grants from central government funds, Council
taxes, business rates and on-street parking.'*
2.2.1 Residence and Domicile
Income from UK sources is taxed in the United Kingdom irrespective of citizenship, place of resi-
dence or company location. However, if an individual is not (ordinarily) resident in the UK, the tax is
limited to the tax deducted at source.'? An individual with residence and domiciliation in the UK is
furthermore subject to taxation on their worldwide income and gains. An individual, who, in contrast,
is only resident but not domiciled in the UK (so called ^Non-Dom"), may claim to be taxed on his
foreign income and gains on a remittance basis.!**
Since 2008, non-dom individuals resident in UK for seven years over the last nine years have to pay a
levy of GBP 30,000 to claim the remittance basis. Individuals who are not resident in the UK for
three years in a row are not liable for taxation of their worldwide income and individuals with less
than five years of residence in the UK are not liable for taxation on their worldwide capital gains in the
UK. To clarify, everybody who stays in the UK for more than 183 days per year is seen as a resident.
In short, an individual is domiciled in the UK if the UK is his permanent home or if he was born in the
UK, and someone is not domiciled if he lives outside UK or was born abroad."
2.2.2 Income and Capital Gains Tax
Income tax is the largest source of tax receipts in the UK. Taxable income includes earnings from
employment or self-employment, pensions, interest on savings, dividends rental income and also in-
131 Picciotto, 1992, p. 4-9.
132 Adam, Browne & Heady, 2010, p. 1-4.
133 Kessler, 2012, p. 29-156.
134 vk, 2007, p. 64 & 65.
755 HMRC, 2012 (1).
136 [ vk. 2007, p. 64 & 65.
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