Draft Legislation for new Non Domicile rules now available
After some considerable wait HM Revenue & Customs and customs have finally published the draft legislation covering changes to rules for taxing UK residents who are not domiciled in the UK.
These are more wide ranging than expected and will have a significant impact on not only Non Doms but also beneficiaries and settlors of offshore trusts whether or not they are Non Doms.
These are more wide ranging than expected and will have a significant impact on not only Non Doms but also beneficiaries and settlors of offshore trusts whether or not they are Non Doms.
There is a significant amount of new legislation to be considered and it may be amended before (or after!) 5 April 2008. Some points that are proposed are.
- Non Doms who have been here for seven years (out of ten) will have to pay £30,000 a year to elect for the Remittance Basis.
- All Non Doms claiming the remittance basis will lose personal allowances and capital gains tax annual exemptions. Subject to a de minimis limit of £1,000 of overseas income / gains.
- Bringing non cash items to the UK such as works of art, cars, furniture, and jewellery will be treated as a remittance after 5 April 2008. If those items were purchased with overseas income or gains then the remittance could be taxable in the UK. If such items have already been brought into the UK and are used after 5 April 2008 the legislation as presently drafted, indicates that there will be a remittance which will be taxable.
- Beneficiaries of offshore trusts who receive capital payments may be taxable on capital gains arising in the trust that have arisen as far back as 17 March 1998 (yes ten years ago!) or gains made at some point in the future.
There is much more to consider but if you are Non Domiciled or have an interest in an offshore trust it would be sensible to contact your accountant now. There are only a few weeks before the new rules become effective.
Comments (10) Read through and enter the discussion with the form at the end
has the legislation succesfully been implemented and is it alredy being enforced.
I cant seem to find any final version of the legislation or anything else on the non-domicile taxation changes post April 08 online.
Could you please help me in getting more up to date information regarding this matter?
many thanks
Jonathan
Yes, the new rules are now part of the statute and take effect from 6 April 2008. The legislation was contained in the 2008 Finance Bill and numerous amendments were made as the bill passed through Parliament both at the committee stage and the report stage.
The final rules are now contained in Section 24 FA2008 (day counting rules for residence) and Schedule 7 FA2008.
Thanks
Lisa
When can I change my non-domicile staus to domicile in the UK? I am a non-domicile resident in the UK since Jan 2005. After reading this article it appears that I will have to change to UK domicile in the tax year (6 April 2010-5 April 2011) to avoid the 30,000 pound sterling yearly non-domicle fee.
I have used the self assessment process every year since residing in the UK .
I recently telephoned and emailed HMRC to ask this question but have not heard from them. They mentioned they replied in a secure mailbox,however I have not been able to find or open the secure mail box to read their reply. HMRC said that a tax technician will contact me regarding this question. HMRC said there is a problem with their Self assessment software which is being investigated.
Ralph
You are under some misconceptions here. Your domicile is fixed by law and your intentions it is merely the method of taxation that changes. If you are not subject to the Remittance basis charge at present because you have been UK resident for less than 7 out of 9 years then you can retain the remittance basis but this may be at the cost of your personal allowances. This is a far from straightforward subject and HMRC are not necessarily in a position to help other than to refer you to their website. Having said all that if by "changing your domicile" you mean you wish to change the basis of taxation you simply prepare your self assessment tax return for the relevant year on the arising basis which then means that no RBC or loss of personal allowances is in point.
thanks
Lisa
During the recent Conservatitive party confrence David Cameron while being interviewed by BBC on the 7th October 2009 stated that if he was elected he had plans to tax Non Domiciled residents to help pay for his plans to increase the IHT threshold. This has confused me as I thought the rules were changed in the 2008 budget. Non Domiciled Residents of seven years or more could either pay £30000 to retain the remitance basis or declare all income derived outside the UK which will then be taxed in the normal way.
Can you confirm the current laws regarding this topic please
Dear John
You are correct in your understanding about the 2008 changes. At the time the Government said there would be no significant further changes to the regime for non doms for the next parliament but of course Mr Cameron has the freedom to do as he chooses if he gains power. There have been mumblings about extending the £30k charge to the day of arrival rather than the seven years but this is hugely impractical and badly affects the competitiveness of the UK (which is why seven years is there in the first place). I would therefore be surprised if there was any real change and my instinct is that this is merely a soundbite - we will have to wait to see if I am wrong.
Thanks
Lisa
Hello there,
A quick question - A property purchased abroad from savings in the UK. Status - Non Dom.
That property rented out abroad - generating Rent. Rent NOT remmitted into the UK.
Taxable in the UK?
Thanks
Pankaj
Pankaj
If you are a remittance basis user then no tax in UK unless and until remitted but if you are on the arising basis then the tax will be payable with credit for any local taxes paid." thanks
Best wishes
Lisa
Hi,
I am a non dom in the UK for 4 years now and has some unremitted income abroad. If I remit all of those income to my adult son living in the UK as a free gift with no strings attached, is there any tax liability for me or my son. And would this make the remaining fund offshore considered as clean capital.
thanks.
Jane
As you will be aware the rules for the taxation of Non-doms changed significantly with effect from 6 April 2008 and are extremely complex, It is possible to make a gift of foreign income to an adult child without it being considered a remittance by you provided the gift is made offshore. If you remitted the funds direct to your son's UK bank account the income would be taxable on you. It is important that a "relevant person" does not benefit in the UK as a result of this gift. The definition of a relevant person includes minor grandchildren.
If the transfer is made offshore the amounts transferred will be treated as being a proportion of each kind of income / capital in the account and so it it will not clean up the remaining funds.