Non-domiciled individuals

Stephen Hignett, Tax Partner, CMS

Following consultation throughout the summer of 2011, and the publication of draft legislation in December 2011, legislation will be introduced in the Finance Bill 2012 (which will take effect from 6 April 2012) to make certain changes to the taxation of UK-resident non-UK domiciled individuals who elect to be taxed on the remittance basis. In particular, the changes will:

  • increase the existing £30,000 annual charge to £50,000 for such individuals who have been resident in the UK in 12 or more of the last 14 tax years; and
  • allow such individuals to remit their overseas income and gains to the UK without triggering a UK income tax or capital gains tax charge, provided (broadly) that the remitted amounts are used to make a commercial investment in a qualifying trading company.

The latter relief from tax charges on remittances of overseas income and gains represents a valuable addition to the remittance basis rules, which the Government hopes will stimulate inward investment by UK resident non-domiciliaries via UK trading companies. 

There will also be consultations on proposed legislation to:

  • increase the amount that a UK domiciled individual can transfer to their non-UK domiciled spouse or civil partner without making a chargeable transfer for inheritance tax purposes; and
  • allow individuals who are non-UK domiciled and who have a UK domiciled spouse or civil partner to elect to be treated as domiciled in the UK for the purposes of inheritance tax.

Any legislation on these issues will be introduced in Finance Bill 2013.



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