HM Treasury has set out proposals to restrict certain individuals from being able to claim non-domiciled status for tax purposes. The Government’s aim, it says, is to address some unfairness in the current tax rules while trying to 'attract talented individuals to live in the UK'.
Among the changes, it is proposed that:
individuals who have been UK tax resident for 15 out of 20 years will be deemed to be UK domiciled for all purposes, including inheritance tax; and
those born in the UK with a UK domicile of origin, but who later acquire a domicile of choice elsewhere (because their permanent home is in another country), will be deemed UK domiciled from the first year in which they become UK tax resident.
Aparna Nathan, chair of the CIOT’s CGT and Investment Income Sub-Committee, said: ‘Among the new proposals, the stricter regime for those born in the UK seems unduly harsh. Attaching such importance to a place of birth, which is clearly outside the individual’s control, and could be a matter of happenstance, is curious.’
Richard Jordan, partner at law firm Thomas Eggar, observed that the proposed changes will not take effect until April 2017, rather than 2016 as hoped. He added: ‘The new proposals do appear to cut some slack to existing non-doms with offshore structures (but not those with British roots). A new tax charge will be introduced on “qualifying” existing offshore structures. We have no detail yet, but HMRC is not renowned for its generosity.’
David Kilshaw, head of private client tax services at EY, said the consultation proposals would be welcomed by many non-doms: ‘They reinforce the message that the government is keen to welcome new non-doms without driving the existing ones away.’ He noted, though, that was likely that the changes would lead to increase in the number of “boomerang doms” (those who live in the UK for up to 15 years and then relocate abroad. only to return six years later. ‘The international community is set to get even more international,’ he said.
A consultation on the proposals seeks views on the best way to legislate the announcements and includes draft legislation to illustrate how the new rules would work in the context of one aspect of the remittance basis for income tax and capital gains tax.
Dominic Slattery, managing director at OneE Group, echoed similar sentiments: ‘Non-doms – most of whom are highly internationally mobile – will find it very easy to duck the rules by managing their residency status. There’s now a much greater incentive to spend less time and money in the UK to ensure the 15 year threshold is not breached. As such, these changes are likely to backfire, making the measure little more than an elaborate play to the gallery – an attempt to win over a public that is increasingly pushing for more fairness in the tax system.’
For more detail, see ....... and for consultation paper, see www.bit.ly/1OhCZni. The consultation closes on 11 November 2015.
HM Treasury has set out proposals to restrict certain individuals from being able to claim non-domiciled status for tax purposes. The Government’s aim, it says, is to address some unfairness in the current tax rules while trying to 'attract talented individuals to live in the UK'.
Among the changes, it is proposed that:
individuals who have been UK tax resident for 15 out of 20 years will be deemed to be UK domiciled for all purposes, including inheritance tax; and
those born in the UK with a UK domicile of origin, but who later acquire a domicile of choice elsewhere (because their permanent home is in another country), will be deemed UK domiciled from the first year in which they become UK tax resident.
Aparna Nathan, chair of the CIOT’s CGT and Investment Income Sub-Committee, said: ‘Among the new proposals, the stricter regime for those born in the UK seems unduly harsh. Attaching such importance to a place of birth, which is clearly outside the individual’s control, and could be a matter of happenstance, is curious.’
Richard Jordan, partner at law firm Thomas Eggar, observed that the proposed changes will not take effect until April 2017, rather than 2016 as hoped. He added: ‘The new proposals do appear to cut some slack to existing non-doms with offshore structures (but not those with British roots). A new tax charge will be introduced on “qualifying” existing offshore structures. We have no detail yet, but HMRC is not renowned for its generosity.’
David Kilshaw, head of private client tax services at EY, said the consultation proposals would be welcomed by many non-doms: ‘They reinforce the message that the government is keen to welcome new non-doms without driving the existing ones away.’ He noted, though, that was likely that the changes would lead to increase in the number of “boomerang doms” (those who live in the UK for up to 15 years and then relocate abroad. only to return six years later. ‘The international community is set to get even more international,’ he said.
A consultation on the proposals seeks views on the best way to legislate the announcements and includes draft legislation to illustrate how the new rules would work in the context of one aspect of the remittance basis for income tax and capital gains tax.
Dominic Slattery, managing director at OneE Group, echoed similar sentiments: ‘Non-doms – most of whom are highly internationally mobile – will find it very easy to duck the rules by managing their residency status. There’s now a much greater incentive to spend less time and money in the UK to ensure the 15 year threshold is not breached. As such, these changes are likely to backfire, making the measure little more than an elaborate play to the gallery – an attempt to win over a public that is increasingly pushing for more fairness in the tax system.’
For more detail, see ....... and for consultation paper, see www.bit.ly/1OhCZni. The consultation closes on 11 November 2015.
