The Internal Revenue Service (IRS), the tax authority in the US, has issued a Revenue Ruling (Revenue Ruling 2011-19) confirming that US taxpayers can claim credit for the remittance basis charge.
The IRS decision means that “non-dom” US tax payers who are resident in the UK and choose to pay tax on the so-called “remittance basis” can set the annual £30,000 levied by the UK tax authorities for doing so against their US tax bills.
According to the Treasury’s consultation document on the taxation of non-domiciles (PDF 383 KB), around 5,400 individuals paid the remittance change in 2008 / 09. A significant proportion of these are likely to have been US taxpayers.
Dan Crowther, director in the private client advisory practice at KPMG in the UK, said: “This decision by the IRS will be welcomed by the many American non-doms living and working in the UK. Because the US has a system of worldwide taxation, these people were running a risk of effectively being taxed twice on the same income. This sensible and pragmatic ruling should eliminate that situation.”
It is proposed that the £30,000 annual remittance basis charge will be increased to £50,000 for longer term residents from 6 April 2012. It is understood that the £50,000 will also be creditable.
-Ends-
Notes to editors
For further information please contact:
Margot Cowhig, KPMG Corporate Communications
Tel: 0207 694 4246 Mobile: 07920 274856: margot.cowhig@kpmg.co.uk
KPMG Press Office: 0207 694 8773
About KPMG
KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and operates from 22 offices across the UK with nearly 11,000 partners and staff. The UK firm recorded a turnover of £1.6 billion in the year ended September 2010. KPMG is a global network of professional firms providing Audit, Tax, and Advisory services. We operate in 150 countries and have more than 138,000 professionals working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. KPMG International provides no client services.
