Tax residency rules for Non-domiciles and Expatriates
Non-domicile reform: how this will impact residency status and remittance
If you’re looking for a comprehensive international taxation service incorporating expatriate taxation, exit / entry planning, residence / treaty claims and remittance planning for non UK domiciled clients, then get in touch. Changes are afoot and anyone looking at exit planning should wait for the Government's legislation on residency in the 2012 Budget. In the meantime, here is everything you need to know about residency and non-domicile status as it stands.
In the 2011 Spring Budget, Chancellor George Osborne announced that individuals with seven years’ non-dom status would continue to pay the annual £30,000 levy. However, he also announced a new £50,000 annual charge from April 2012 for overseas non-domiciles resident in at least 12 of the preceding 14 tax years. The Gaines-Cooper residency case further delayed the Government's Non-Domicile Reform consultation paper. This landmark ruling, in favour of the Supreme Court, has completely changed Accountants’ views on residency and the statutory definiton of non-residence.
The non-domicile reform: what does this mean?
Summer 2011 saw HM Revenue & Customs, HM Treasury and the Government publish a consultation paper called The reform of the taxation of non-domiciled individuals. In essence this consultation focused on the taxation of non-domiciled individuals and a statutory definition of non-residence.
Changes to taxation of non-domiciles
Non-domiciles can claim tax on what is called the remittance basis and from 2008 an annual remittance charge of £30,000 was introduced. The £30,000 charge will be retained for non-doms resident for seven tax years. From 6 April 2012, a new £50,000 charge will be introduced for those who wish to retain their non dom status and have been non-domiciled for at least 12 tax years.
The Gaines-Cooper case
October 20th saw the Supreme Court side with HMRC and throw out Mr Gaines-Cooper's residency status challenge. This high profile case has created uncertainty over when the taxman would treat a taxpayer as a non-resident.The Government's consultation on the introduction of a simple and transparent residency test is now more important than ever.
Changes to Tax residency rules
HM Revenue and Customs is proposing to change the counting system for determining residency and changes to the non-domicile taxation. The counting issue could affect expatriates and how much time they spend in the UK. Under new proposals the day of arrival and departure will count.
For more details please see Tax Planning
