Changes to Finance Bill 2017: Impact for ‘non-doms’
In July 2015 significant tax reforms were announced for non-UK domiciled individuals who have been long-term UK resident. It was proposed that, from April 2017, those non-domiciled individuals who have been UK resident for at least 15 of the last 20 tax years will no longer be able to claim the remittance basis of taxation in respect of their non-UK income and gains.
Non-UK domiciled individuals who claim the remittance basis are only subject to UK tax on their non-UK income and gains to the extent that they remit their non-UK income and gains to the UK. When an individual has been UK resident for at least 7 out of the previous 9 tax years an annual remittance basis charge is payable which ranges from £30,000-£90,000 depending on the number of tax years the individual has resided in the UK.
Under the new proposals, from 6 April 2017 long-term UK residents would be deemed to be UK domiciled for the purposes of all UK taxes meaning that their worldwide income and gains would be taxed in the UK on an arising basis. Their worldwide estate would also be in the scope of UK inheritance tax.
On 25 April 2017 the government dropped the majority of Finance Bill 2017 including the ‘deemed domicile’ rules mentioned above. For many long-term UK resident, non-UK domiciled individuals who have historically claimed the remittance basis this creates a period of uncertainty. We expect that the deemed domiciled provisions will appear in the next Finance Bill, regardless of who wins the election.
This should mean that for 2017/18 at least, long-term UK residents should still be able to claim the remittance basis of taxation and pay the remittance basis charge in line with the number of tax years they have resided in the UK.