Non-domiciled individuals are among several groups being forced to pay their ‘fair share’ to helping the UK emerge from its deficit travails, as George Osborne announced the annual ‘remittance basis charge’ of taxation will increase.
‘Remittance basis’ charges are applied whereby individuals pay UK tax on their income and capital gains earning here, and any foreign income and capital gains they ‘remit’ back to the UK. People pay £30,000 or £50,000 to use this facility.
Not all non-doms pay this charge as some pay on an ‘arising’ basis, which applies UK tax on all income.
In documents published today (3 December) as part of the Autumn statement, HM Revenue and Customs confirmed the charge paid by people who have been UK resident for seven out of the last nine years will remain at £30,000.
The charge paid by people who have been a UK resident for 12 out of the last 14 years will increase from £50,000 to £60,000. A new charge of £90,000 will be introduced for people who have been UK resident for 17 of the last 20 years.
The government also unveiled plans to consult on making the election of non-dom status apply for a minimum of three years.
Kay Aylott of accountancy firm Reeves, said the increase in the level of the ‘remittance basis’ announced today will no doubt result in fewer non domiciles claiming the remittance basis of assessment and instead opting to be taxed on their world wide income.
“For non-domiciles who have been resident for 17 of the last 20 years they will see an 80 per cent increase in the RBC to £90,000 per annum and for a 45 per cent taxpayers their offshore income would need to be in excess of £200,000 in order for a remittance basis claim to be worthwhile.
“Currently non-doms can opt in and out of the remittance basis depending on the level of their offshore income and gains.
“The government announced today that they will be consulting on making the remittance basis election apply for a minimum of three years thus diminishing the available tax planning opportunities for non-doms.
“The government appear intent on reducing the unfair tax advantages seen to benefit non resident and non domiciles.”
Additional reporting by Donia O’Loughlin