Services for individuals

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. Though the Chancellor did not highlight any residency changes in his Budget 2012 speech, be under no illusion the following changes did take place.

Key domicile and residence rule changes 

From 6 April 2012 the following non-domicile taxation changes ocurred:

  • The annual charge of £30,000 was increased to £50,000 for those resident in the UK for 12 or more of 14 tax years;
  • Non-domiciles are permitted to bring overseas income and gains to the UK tax-free to invest in qualifying businesses; and
  • The complexity of remittance based rules were reduced.

The non-domicile reform: what did it involve?

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. The Gaines-Cooper 2011 residency landmark ruling completely changed Accountants' views on residency and the 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 was 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.

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 counts only if you are still here at midnight. Contact Mark Busby 01344 620495 or for the latest on residency rules.

For more details please see Tax Planning