“They need to think about how many years they will be here for. If they are only going to be here for a few more years, maybe IHT planning should involve something like a term assurance policy.”
Those in Carlos’s position could utilise their offshore clean capital by using it as a security for a bank loan which can be invested in offshore in income and capital gains producing assets, Ms McKeever said.
She added: “The investments will hopefully make lots of profit so if the non-dom needs some money in the UK, they can sell some of these investments, repay their offshore borrowing, release some of the security and then bring it into the UK tax free.”
She added: “It does not work the other way round. You can’t borrow offshore then bring the money to the UK and secure that on your non-UK income and gains - that counts as a remittance.”
From 6 April, all non-UK domiciled UK resident individuals (except returning non-doms) will been given a temporary two-year window in which to rearrange their mixed funds overseas to enable them to separate those funds into their constituent parts.
This means they will be able to move their clean capital, foreign income and foreign gains into separate accounts, and will then be able to remit from their accounts as they wish and pay the appropriate amount of tax.
Mr Mindell said: “Once non-doms become UK domiciled under the new rules, they should look at where their tainted money is and where their clean capital is. They should use the arrangements of the remittance basis on the clean up to identify which is which.
“Use the tainted money first if you are to make investments that qualify for business investment relief (BIR) because you might as well use the tax provisions.”
If BIR applies, the taxpayer can use their non-UK income or gains to make a UK investment without incurring the UK tax charge which would otherwise arise on the remittance of the non-UK income or gains.
The more critical considerations arising from the changes applies to individuals like ‘Adrienne’, who is also taxed on remittance basis, holds offshore investments, used up her clean capital and has been a UK resident for 15 years with an intention to extend her stay for a few more years.
