“Non-domiciled” individuals face new rules
Tax system to receive a shake-up

The proposed rule changes announced for “non-domiciled” individuals could affect a diverse group of people. Currently individuals can claim “non-domiciled” status if the country with which they have the deepest connections, usually their place of birth, is outside the UK. The changes are targeted at “non-domiciled” foreigners who have been living in Britain for seven out of the past ten years. They could face an annual £30,000 charge for staying outside the tax system, or otherwise have to pay income tax on their offshore income of as much as 40 per cent.

As well as paying the £30,000 charge, individuals opting for “non-domiciled” status would not be able to claim personal allowances. The Chancellor said that the new rules were aimed at “preventing people claiming that they are out of the country when they are actually here, from disguising income as capital and from claiming in effect two allowances.” The Chancellor’s proposals include modifications to the so-called “90 day” residency rule for taxpayers.

Individuals with unremitted foreign income of less than £1,000 would be exempt from the proposed new rules. The Treasury said it will consult on the question of whether “non-domiciled” individuals living in the UK for more than 10 years should pay more tax.

Proposed changes were also announced by the Treasury in relation to anomalies in the rules, which may mean that individuals could avoid paying UK tax on foreign income and gains brought into the UK. This would remove the ‘ceased source’ rule and reduce the scope to use offshore structures, such as companies and trusts, which convert taxable income and gains into non-taxable payments.

Need more information? Please email or contact us with your enquiry.