US non-doms given UK remittance charge boost

US TAX AUTHORITIES have said that UK-based non-doms can set their remittance basis charges against their US tax bills.

A large majority of the non-doms based in the UK are US citizens. As part of UK rules, those living in the UK for seven years or longer are required to pay a “remittance charge” of £30,000, which means they pay tax only on the money remitted to the UK and not on their worldwide incomes.

The US taxes its citizens on a worldwide basis, meaning non-doms effectively pay tax twice on the same income.

However, the US Inland Revenue Service last week ruled that the £30,000 remittance charge levied on non-doms by the UK government can now be set against their US tax bills.

Dan Crowther, director in the private client advisory practice at KPMG in the UK, said: “This decision by the IRS will be welcomed by the many American non-doms living and working in the UK. Because the US has a system of worldwide taxation, these people were running a risk of effectively being taxed twice on the same income. This sensible and pragmatic ruling should eliminate that situation.”

Chancellor George Osborne announced in the Budget that longer-term residents will have to pay £50,000 as part of their remittance basis charge. KPMG said that this charge will also be creditable.

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