Tax optimization for Ukrainians in the UK

It is not uncommon for Ukrainians to stay in the UK for more than 183 days, while receiving income on a permanent basis. There is also a fairly common practice when a person starts working for a local employer and simultaneously carries out projects abroad. Given that the rates of the tax burden are progressive, depending on the amount of profit, Ukrainians quickly face the issue of optimal attraction and further taxation of income in the UK.

First of all, it is necessary to determine the presence or absence of tax residence status in the UK. From the moment you become a tax resident, in accordance with UK tax law, you are required to pay taxes on any income throughout the world, and non-residents pay tax only on their income in the UK and do not pay tax on their income abroad. So your UK status has a fundamental impact on whether you need to pay UK tax on your foreign income.

Whether you are a UK resident usually depends on how many days you spend in the UK in the tax year (6 April to 5 April of the following year).

Under local law, you will only be resident in the UK when both of the following apply:

• You pass an internal test for sufficient connections.
• You do not answer any of the foreign tests.

UK domestic test

You can be resident on the UK internal test if:

• You spent 183 or more days in the UK in a tax year.
• Your only home has been in the UK for 91 consecutive days or more - and you have visited or stayed in it for at least 30 days in a tax year
• You worked full-time in the UK for any period of 365 days and at least one day of that period was in the tax year you are checking

Foreign test

Generally, a person is a non-resident if:

• You spent less than 16 days in the UK (or 46 days if you were not a UK resident in the previous 3 tax years)
• You have worked abroad full-time (on average at least 35 hours per week) and spent less than 91 days in the UK, of which no more than 30 were spent at work
• In addition, a person may also be a resident in accordance with a test for sufficient links to the UK, for example, work or family.

Thus, if you understand that you are a tax resident of the UK, it's time to move on to the definition of taxation.

Local tax residents pay three mandatory types of taxes.

1. income tax.
2. National Insurance.
3. Capital gains tax.

Thus, indeed, with the correct organization of the entire process, interacting with another jurisdiction that has a loyal tax burden for local legal entities, we can provide you with a concrete result in optimizing the tax burden through the taxation of your income by the capital gains tax regime.

Given the above, in order to determine the possible amount of optimization, a number of acceptable jurisdictions, the process of working with banks and local regulatory authorities, as well as to obtain a result, you can contact me, Sirenko Nikolay, a specialist in international corporate law at Prikhodko & Partners Law Company.