If you are leaving the UK, you need to be aware that it can be difficult to lose your UK tax resident status. It can stick to you for a number of years after you have left. Without careful planning, you may still be subject to UK tax on your income and capital gains even if you are living in another country at the time your income is generated and your gains are realised.
There are special rules for individuals who are non-UK domiciled. Very broadly, an individual is domiciled in the jurisdiction which he regards as his permanent home. An individual will have a domicile of origin which is determined at birth and is normally governed by the father's domicile. Although in some circumstances, it is possible to adopt a domicile of choice or dependency.
For those who are non-UK domiciled (non-Doms), there are special tax rules. These rules are often referred to as the remittance basis and offer a favourable method of taxation. The remittance basis was fundamentally changed in 2008 and non-Doms need to be aware of the changes.
Non-Doms now need to consider a number of questions:
- Should I claim the remittance basis and pay the £30,000 (from 2012 this is expected to increase to £50,000 for Non Doms who have been UK resident for 12 or more years)?
- If paying the £30,000, what income/gains should I nominate and how should these be held?
- Should I make an election to claim relief for overseas losses?
- Do I need to review my offshore structures (eg. trusts/companies) in the light of the new rules?
- Do I need to review my overseas bank accounts in the light of the new rules?
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What funds are being used my offshore entities to pay for services in the UK and might this give rise to a remittance?
- Should I consider investing my foreign income or capital gains in UK businesses so that I can potentially benefit from the removal of the UK tax charge when I remit such funds from April 2012? (This measure was announced in the March 2011 Budget and the detail will be subject to consultation)
Trustees of offshore trusts will also be specifically affected by the changes contained in the new rules and need to consider a number of questions including:
- Whether to make the rebasing election to effectively rebase their assets (for payments to non-domiciled individuals) as at 6 April 2008.
- Whether their record keeping is sufficient to enable UK resident Beneficiaries to comply with the new rules.
KPMG can guide non-Doms who are seeking to understand the impact of the lengthy and detailed tax rules on their affairs. We can help both individuals and trustees to consider the above questions, as well as other questions arising in relation to residence domicile and overseas assets and structures.
Useful Information
We have produced a document which clearly outlines if you should pay the £30K.
Download Should I pay the £30K? (PDF 440KB)
