Pre Budget Report 2007 - Residence and Domicile
The long awaited attacks on the non domiciliary have arrived. Having rubbished the £25,000 levy put forward by the Conservatives, Mr Darling has announced a £30,000 surcharge for those who will have been resident in the UK for 7 years at 5 April 2008.
The £30K is in addition to the tax that would be payable on the remitted income. There will be frantic calculations as to whether the advice should be to remit now. There is no information currently on if or how that will fit with any double taxation treaties…
There are a number of detailed attacks which have a small effect but cumulatively are pernicious. From 6 April 2008 it will not be possible to combine a claim for personal allowances with the remittance basis unless your unremitted income is less than £1000 per year.
The residence rules got a lot of publicity earlier in the year and despite their protestations at the time the Revenue have now said that after 6 April 2008 the days of arrival and days of departure will be counted as days of presence in the UK. This is bad news for international commuters.
The final sting in the tail is that there are various “corrections to anomalies”. In short these are:
Stopping the manipulation of the remittance basis by claiming it one year and not the next
• Stopping the source ceasing rules
• Reducing the scope for the alienation of income or gains using offshore trusts and companies – we will wait with bated breath for that one…
• Applying avoidance measures which do not currently remittance basis users.
Some of these are are quite scary and there are potentially enormous changes to both existing arrangements and the way in which we plan for non UK domiciliaries.
A consultation is promised but it will perforce be a short one if legislation is to be introduced in FA08 as the consultation papers will not be issued to the end of the year. Far be it from us to suggest this is a cynical attempt to minimise the opportunity for anyone to consider matters properly. We will be posting further details as soon as we can.
http://www.hmrc.gov.uk/pbr2007/pbrn18.pdf.
There are a number of detailed attacks which have a small effect but cumulatively are pernicious. From 6 April 2008 it will not be possible to combine a claim for personal allowances with the remittance basis unless your unremitted income is less than £1000 per year.
The residence rules got a lot of publicity earlier in the year and despite their protestations at the time the Revenue have now said that after 6 April 2008 the days of arrival and days of departure will be counted as days of presence in the UK. This is bad news for international commuters.
The final sting in the tail is that there are various “corrections to anomalies”. In short these are:
Stopping the manipulation of the remittance basis by claiming it one year and not the next
• Stopping the source ceasing rules
• Reducing the scope for the alienation of income or gains using offshore trusts and companies – we will wait with bated breath for that one…
• Applying avoidance measures which do not currently remittance basis users.
Some of these are are quite scary and there are potentially enormous changes to both existing arrangements and the way in which we plan for non UK domiciliaries.
A consultation is promised but it will perforce be a short one if legislation is to be introduced in FA08 as the consultation papers will not be issued to the end of the year. Far be it from us to suggest this is a cynical attempt to minimise the opportunity for anyone to consider matters properly. We will be posting further details as soon as we can.
http://www.hmrc.gov.uk/pbr2007/pbrn18.pdf.
