Overseas aspects of taxation
Individuals
Residence is determined by the statutory residence test: automatic non-residence (fewer than 16 days, or fewer than 46 with no historical ties), automatic residence (183 days), then the sufficient ties test. Domicile is a general law concept; deemed domicile applies after 15 of the previous 20 tax years, or where the individual was born in the UK with a UK domicile of origin. Non-domiciled individuals may claim the remittance basis, losing the personal allowance and CGT annual exemption and paying the remittance basis charge after seven years (£30,000) and twelve years (£60,000); otherwise they are taxed on the arising basis.
Double taxation
Relief comes by treaty or unilaterally, normally as a credit limited to the lower of the foreign tax and the UK tax on the same income, with any balance payable in the UK. Treaties resolve dual residence through tie-breakers and allocate taxing rights.
Companies
Corporate residence turns on central management and control. A non-UK company with a UK permanent establishment is taxed on the profits attributable to it. Transfer pricing (arm's length principle), the diverted profits tax and controlled foreign company rules protect the UK base.
Traps
Forgetting that the remittance basis removes allowances; ignoring the ordering and nomination rules for remittances; and applying a treaty article without checking the tie-breaker sequence.
Worked example
Overseas income of £40,000 is taxed abroad at 30% (£12,000). UK tax at 40% is £16,000. The credit is limited to £12,000, so £4,000 remains payable.