Budget 2008 - Non Doms and the £30,000 charge for the remittance basis.
There have a number of changes announced in today’s Budget to the proposed levy of £30,000 for taking advantage of the remittance basis.
The first change to note is that it will only apply to adults. Children will not have to pay the charge until the year in which they turn18. Secondly the de-minimis limit of £1,000 has been raised to £2,000.
The most significant change is that it will now a tax charge rather than a stand alone charge and, as a result, will be treated as such for the purposes of Double Taxation Agreements. This follows serious lobbying by the, particularly American, ex-pat community as it looked like US citizens would not get credit for the £30,000 against their US tax liability.
The charge will be attributed to unremitted income or gains (at the choice of the individual) and when these are eventually remitted to the UK they will not be taxed again. However there will be ordering rules that will ensure that untaxed unremitted foreign income and gains will be treated as remitted before income or gains upon which the £30,000 has been paid.
The £30,000 charge will also be available to cover Gift Aid donations.
The first change to note is that it will only apply to adults. Children will not have to pay the charge until the year in which they turn18. Secondly the de-minimis limit of £1,000 has been raised to £2,000.
The most significant change is that it will now a tax charge rather than a stand alone charge and, as a result, will be treated as such for the purposes of Double Taxation Agreements. This follows serious lobbying by the, particularly American, ex-pat community as it looked like US citizens would not get credit for the £30,000 against their US tax liability.
The charge will be attributed to unremitted income or gains (at the choice of the individual) and when these are eventually remitted to the UK they will not be taxed again. However there will be ordering rules that will ensure that untaxed unremitted foreign income and gains will be treated as remitted before income or gains upon which the £30,000 has been paid.
The £30,000 charge will also be available to cover Gift Aid donations.
Comments (6) Read through and enter the discussion with the form at the end
lisa,
what happened to the 17 year non dom proposal in the
consultative document?
thanks
gerald
Gerald
The proposal, which would have mirrored the inheritance tax rules, was quietly dropped by the time details were published in the Budget
Thanks
Lisa
Lisa
I will be electing to pay the Remittance Basis Charge. Would I be still required to make disclosures about income and accounts abroad ?
Thanks
Anil
Anil
Only a limited amount of information is needed. You will need to identify your nominated income and/or gains on your tax return and you will of course have to report any remittances in the usual way . Beyond this payment of the RBC does not itself generate any disclosure requirements.
thanks
Lisa
I live in the UK and support myself primarily on my US pension income that I remit here. I pay US tax on the pension money when paid in the US and then bring it here. Will I now be taxed again on that money, both as income (worldwide) and as remitted funds? If so, is there a way to pay only once, either as income (worldwide) or as remitted funds?
Dear Richard
Thanks for your message. It is not possible to answer precisely without knowing a lot more about your background and whether you are a remittance basis user or not and your position under the US/UK double tax treaty. However, broadly, if you bring money to the UK which arose at a time when you are a remittance basis user (even if you are now taxed on an arising basis)you will then be taxed on it but you will get credit for the US taxes paid. If you are taxable on an arising basis you will need to declare your worldwide income but you will again get credit for any US taxes paid.
Thanks
Lisa