UK and International Tax news
Changes To Non Dom Tax
Monday 22nd February 2016
HMRC has recently issued a policy paper together with draft legislation and an explanatory note on proposed changes to the taxation of non domiciles which were announced by the Chancellor in the Summer 2015 Budget.
The UK currently provides tax advantages for non doms who are UK resident in so far as they are not subject to UK tax on income and gains earned outside the UK which are not remitted to the UK. However, in order to access these tax advantages longer term UK resident non doms must pay the Remittance Basis Charge (RBC), or pay the full amount of UK tax that would be charged to a resident UK dom. The RBC is set at £30,000, £60,000 or £90,000 depending on the length of residence.
The government says it wants to reform the tax treatment of non doms so that the UK can continue to “benefit from the presence of talented foreigners while also addressing unfair tax outcomes”.
Legislation is to be introduced in the 2016 Finance Bill to deem certain persons, who would otherwise be non domiciled in the UK as a matter of general law, to be domiciled here for the purposes of income and capital gains tax.
The two deeming provisions are given by Conditions A and B. Condition A applies to anyone born in the UK with a UK domicile of origin and whilst they are UK resident. Condition B applies to anyone who has been resident in the UK for at least 15 out of the previous 20 tax years.
The proposed measure will restrict access to the Remittance Basis so that anyone deemed UK domiciled by virtue of either Condition A or B cannot access the Remittance Basis.
In addition, the measure amends other aspects of income tax and capital gains tax law that offer advantages to non doms but which do not directly rely on parts of the Remittance Basis to be amended.
For further details on the proposed changes, please contact Keith Rushen on 0207 486 2378.
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