PERMANENT non-domicile status will disappear from April 2017, the chancellor confirmed in today’s Emergency Budget.
Anyone who has been resident in the UK for more than 15 of the last 20 years will be treated as UK-domiciles for tax purposes and will be taxed on their worldwide income and gains.
Under the reforms, it was also announced UK-born taxpayers with UK-domiciled parents will no longer be able to create a domicile of choice elsewhere in the world if they take up UK residency again later on.
Previously, if a non-domiciled individual owned an offshore company which in turn owned UK property, the UK property did not form part of their UK estate for inheritance tax purposes. Under new plans, it will be not be possible to avoid UK tax through this mechanism, and the asset would be liable for UK inheritance tax irrespective from April 2017.
BKL Tax partner Geraint Jones told Accountancy Age: “The government is clearly targeting non-domiciled individuals with three significant changes, which potentially could greatly increase their exposure to UK taxes.
“There is already deemed domiciled legislation for inheritance tax, which looks at 17 years out of 20, and so to look at 15 years out of 20 would be asymmetrical. Whether this move supercedes that is unclear.”
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