Under current rules, non-UK domiciled individuals are liable to UK tax only on the income and gains which arise in the UK. Further, they are only liable to offshore income and gains to the extent that they are remitted (brought into) to the UK. Individuals who have been resident in the UK for at least seven of the last nine years must pay an annual £30,000 charge to use this regime.
In the 2011 Budget, the Government confirmed that it would consult on making more changes to the taxation of non-domiciled individuals to ensure that they made a fair contribution to the UK and the charges reflected the time that they have enjoyed the privilege and benefits of living in the UK. Subsequently, a consultation document was published which contains two key developments:
- The remittance basis charge will be increased to £50,000 per annum for those individuals who have been resident in the UK for at least 12 of the 14 tax years prior to the year of the claim. The charge will work in exactly the same way as the current £30,000 charge and will take effect from 6 April 2012.
- In an effort to boost investment in the UK, non-domiciled individuals will be allowed to remit income into the UK without incurring a UK tax charge where they do so to invest in a qualifying business. Accessing this exemption will require careful and timely planning as well as detailed record keeping and thorough due diligence of target companies to ensure that they meet the criteria. April 2012 is perhaps not that far away and it may be worth reviewing possible investment opportunities.
More information can be found in the Herbert Smith briefing which can be found at http://www.herbertsmith.com/NR/rdonlyres/A1932C99-F66B-4A2E-8061-FF3D24A9C5F5/0/9111Taxbriefingd4.pdf. The consultation document setting out the Government’s proposals can be found at http://www.hm-treasury.gov.uk/consult_nondom_tax_reform.htm.