Non-domicile taxation and statutory residence test - Mazars - United Kingdom
Non-domicile taxation and statutory residence test
Recently the UK Treasury published its core reforms to non-domicile taxation, incorporating the introduction of a higher level of remittance basis charge, a new relief to encourage business investment in the UK and some simplifications to the existing rules. These will be detailed in the Finance Bill 2012 as announced in Budget 2011.
16/12/2011
However, the much anticipated introduction of a statutory test of UK residence is being delayed for a year. Whilst it is positive that the Government is recognising the importance of introducing legislation that is fit for purpose, it was hoped that the introduction of the statutory residence test would provide certainty of treatment that has been eagerly awaited following the Gaines-Cooper judgement. The Government has confirmed that it is committed to the form of statutory residence test outlined in consultation with the aim of additional consultation “to provide more certainty for taxpayers and greater window for scrutiny in advance of the legislative process”. It is now envisaged that legislation will be introduced in Finance Bill 2013, effective from 6 April 2013.
The draft legislation published today incorporates changes taking effect from 6 April 2012, as previously announced:
- The introduction of a £50,000 remittance base charge for non-domiciled individuals who have been resident in the UK for 12 or more of the preceding 14 years;
- Amendments to the remittance basis rules relating to nominated income, foreign currency bank accounts and the taxation of assets sold in the UK;
- Relief for non-domiciled individuals seeking to remit funds to the UK for business investment purposes.
We welcome the Government’s recognition that it is crucial that there is a clear and practical taxation policy in place to encourages non-domiciled individuals to live and invest in the UK, however, the uncertainty caused by the delayed statutory residence test is a concern. In the meantime, specialist advice should be sought in the event of any queries.
For more information please contact Janet Pilborough-Skinner or Lynne Rowland.
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