To recap, if you are a non-dom living in the UK, certain tax residency milestones can impact your tax status.
A £30,000 charge applies to access the remittance basis for those who have been resident in the UK for some part of at least 7 out of the previous 9 tax years. This ‘remittance basis charge’ increases to £60,000 for individuals who have been UK resident in at least 12 of the previous 14 tax years.
Since 6 April 2017, a non-dom who has been UK tax resident in at least 15 of the previous 20 UK tax years is treated as domiciled in the UK for all UK tax purposes, including inheritance tax, and will no longer be able to make a claim to be taxed on the remittance basis.
To compensate for the impact of the 6 April 2017 Non-Dom Reform , two valuable transitional reliefs have been introduced:
- Non-UK domiciled individuals typically have a one–off opportunity to re-organise offshore mixed funds into their constituent parts. This allows them to segregate “clean capital” or previous UK tax earnings from other income/gains which would be taxable if remitted to the UK. This opportunity to identify funds which can be remitted to the UK tax free is only available until 5 April 2019 and the planning must therefore be undertaken as soon as possible.
- Individuals who became deemed domiciled on 6 April 2017 under the 15 out of 20 year rule will be able to benefit from rebasing of their foreign situated capital assets to their market value on 5 April 2017, for Capital Gains Tax ("CGT") applies in certain cases when an asset is sold for more than it was originally purchased. The taxable gain (profit) may be triggered following the transfer of an asset, although commonly this would follow a sale. A number of tax reliefs are available to exempt or reduce the tax that may apply. Basic tax planning may... purposes.
The clock is ticking on the opportunity to cleanse mixed funds before 5 April 2019 and action is required sooner rather than later. We would be pleased to provide you with more detailed advice to help you identify funds which can be segregated and remitted to the UK in a tax efficient manner, please contact us for details on how we can help.