Taxation of non-UK domiciled individualsAction required |
The changes to the taxation of non-UK domiciled individuals have been effective since 6 April 2008 and are far wider than the £30,000 annual charge for the remittance basis.
Therefore, all UK resident, non-UK domiciled individuals should be reviewing their tax affairs to determine the best way forward.
The good news
The remittance basis remains an option for the non-UK domiciled individual providing numerous opportunities for those individuals to mitigate their UK tax exposure with careful management.
The new rules do however represent a tightening of the regime and so carrying on financial structuring as before is unlikely to be prudent. There are unexpected changes that have been introduced which will catch out the ill-informed. We have highlighted some of these below.
The £30,000 charge
The payment of the charge may not be financially viable for some. For those that do choose to pay it is possible to avoid the payment itself being treated as a remittance. Furthermore, income and/ or gains need to be ‘nominated’ - getting that and future remittances wrong can lead to complex and costly calculations so it will pay to plan ahead and be organised.
Remittances
There are now specific rules governing how to determine the nature of funds remitted from non-UK accounts, together with a different set of rules for determining the nature of funds being transferred between offshore accounts.
From 6 April 2008 the order of remittances from non-UK ‘mixed funds’ is not as favourable and therefore thought should be given to appropriate segregation and structuring of bank accounts.
Taxable remittances can now also arise on donors if gifts are remitted by close family members and if ‘source ceased’ income is remitted after 6 April 2008.
Anyone with an ‘offshore mortgage’ also needs to proceed with caution as those rules have also changed.
The opportunities
The impact of the new rules can be mitigated with careful management and advance thinking.
We have a team of specialists who can help and advise to ensure you pay the right amount of tax and do not make unnecessary taxable remittances.
Please contact your usual Deloitte private client advisor for more information.
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