The proposed new regime for non-domiciled and not ordinarily resident taxpayers continues to develop. Draft legislation has been issued and the Revenue have been forced to issue clarifications and concessions which in some cases amends the new rules as drafted.
However, the fundamentals remain very much as originally announced:
• If you are resident in the UK for any part of seven out of the previous nine tax years, your tax for the year in question will be calculated on worldwide income unless you claim the remittance basis. If you claim the remittance basis, a further £30,000 p.a. tax charge will be levied and various personal allowances will not be available to you.
• The definition of remittance has been severely tightened. Many tried and tested routes to bring money into the UK without a tax charge will be closed from 6 April.
• There are to be new rules for “matching” monies coming out of mixed funds with their ultimate source. Again, this will make it more difficult to remit capital in preference to income or gains.
• There is a raft of anti-avoidance measures, particularly aimed at offshore trusts and companies. It is this area that has seen the most developments from the recent flurry of activity.
• The definition of a days presence in the UK for calculating whether you are resident or not has been tightened up to include days of arrival and departure. There is a limited concession for individuals who are only in the UK in transit to another country.
The position of overseas trusts and companies is now extremely complex and much of what has been said recently is not yet reflected in the draft legislation. However, it is the Revenue’s reported intention that gains within an offshore structure which is established by a non UK domiciliary will broadly be taxed as they arise (if they arise on a UK asset) or when they are remitted (if it is an overseas asset). For other structures, distributions will be matched to gains and taxed as they arise for UK assets, or again when remitted for overseas assets.
However, a major concession has been recently suggested in relation to offshore companies and trusts. This is that mechanisms are being considered to provide for a general rebasing of assets held by offshore trusts (and offshore companies owned by such trusts) on 6 April, so that gains accrued but not realised by that date should escape tax under the new regime. This will not apply to assets owned personally nor it seems standalone companies not owned by a trust.
You need to bear in mind that there is still huge uncertainty – we are currently looking at draft legislation, published statements of intent from the Revenue and the content of meetings with the Revenue. The Budget is still to come.
