Roger Harding, tax director at Gordon Dadds, says there are many who say it is only fair all long-term UK residents contribute “their fair share” in terms of UK tax.
The new rules announced in the summer Budget will effectively end non-dom status for those who have been or are about to become, resident for 15 of the previous 17 tax years with effect from 6 April 2017.
The £90,000 ‘remittance basis charge’ will then be unnecessary.
However, Neil Walker, global head of tax at deVere Tax Consultancy, points out there is a period of consultation before the changes become law.
The technical briefing paper released at the time of the summer Budget details the following changes:
• UK resident non-domicile individuals will be deemed domiciled for income tax and inheritance tax purposes once resident for 15 out of 20 years;
• once deemed domiciled, an individual will remain so for five years after leaving the UK;
• non-domicile individuals who set up offshore trusts before becoming deemed domiciled will not be taxed on the income within the trust; and
• an individual who has a domicile of origin in the UK can currently acquire a domicile of choice outside of the UK, and then become UK resident and claim no domicile status.
At present it is possible for a person who has a British domicile of origin to leave the UK, establish a foreign domicile abroad and set up offshore structures for tax planning purposes.
That person, whom Mark Davies, managing director of Mark Davies and Associates, says the industry has christened a “boomerang non-dom”, could subsequently return to the UK and still maintain their claim to foreign domicile and enjoy tax benefits.
The government has announced that if a foreign domiciliary who was born with British domicile returns to the UK then they will be subject to tax as a British domiciled person and will be taxable on their worldwide income and gains.
These rules will apply from 6 April 2017 and will apply to all boomerang non-doms even those who returned prior to 5 April 2017.
