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Non-Domicile Rules

Asset-Protection

The UK’s tax legislation with regards to non-UK domiciled individuals can be very difficult to navigate without specialist tax knowledge. The rules change often and it is also an area into which HMRC undertake significant enquiries, so it is vital that your affairs are reviewed and documented correctly.

A UK resident non-UK domiciled individual has the choice to be taxed on the remittance basis. This means that they are only assessed to tax on UK income and capital gains and on their overseas income and capital gains when enjoyed in the UK.

If the overseas income and capital gains are not remitted to the UK then they remain untaxed in the UK. This is a very important concession and one that can be very valuable to the non-UK domiciled individuals.

However, it is very easy to fall foul of the UK legislation and therefore any arrangements which may be put in place need to be reviewed regularly to ensure that there are no inadvertent remittances and to ensure that offshore funds do not become mixed.

LONG-TERM RESIDENTS

For UK non-dom residents who have been in the UK for 7 out of the last 9 tax years, they will have to pay £30,000 to remain on the remittance basis of taxation. If they stay for 12 out of 14 years then this charge is increased to £60,000. These tax charges are significant and specialist advice should be sought as soon as possible to put in place any necessary planning.

DEEMED DOMICILE

From 6 April 2017, any non-dom individual who has been resident in the UK for 15 of the past 20 tax years will become ‘deemed’ UK domiciled for income, capital gains and inheritance tax.

This means that from the 16th year the individual will be taxed in the UK on their worldwide assets, which is a significant departure from the ‘old’ domicile rules.

Specialist advice should be taken as early as possible as there are planning opportunities available.

HOW CAN HAMILTON ROSE HELP?

Hamilton Rose can ensure that proper structures are put in place to ensure that the deemed domiciled individual is protected from these new rules. This can include excluded property structures, that ensure the assets remain outside of their estate, through to income and capital gain deferral structures allowing the individual to have more control over when they are taxed on the income and gains.

If you would like to understand the opportunities available to structure your affairs, please contact us.