- Non Dom taxation concerns residents in the UK with interest abroad
- Tax-exemption for interest abroad with specified exceptions
- Tax regulation changes apply from 6 April 2008
When can I register for Non Dom status? British residents with interests abroad can register for 'non domiciled' status, meaning they do not pay tax on earnings made outside the United Kingdom, even if they are resident here. There are a number of tax advantages that may still be enjoyed by individuals whose domicile is outside the UK. The concept of domicile is not dependent upon the residence status of the individual. In many cases individuals may have lived in the UK for many years but are still regarded as not domiciled here. You will be regarded as resident if you - spent 183 or more days in a tax year in the UK
- visit the UK an average of 91 days per tax year over four years
A day in the UK will only be counted at midnight. This means that if you travel through the UK within one day, it does not have to be counted. The reason for Non Dom Legislation
The UK traditionally relies on corporation tax rather than social insurance contribution often encountered in many other European countries and is therefore geared towards keeping its market attractive to non-domicile investors by cutting corporation tax. Non Dom and the Republic of Ireland
The Republic of Ireland is particularly interested in making itself attractive, having received support for its infrastructure from Brussels, and adopting a strategy of reducing corporate tax rates even further and hence separating themselves from the changes in Non Domicile Taxation Policy being introduced in the UK. Changes in Non Dom Legislation Gordon Brown and the Treasury are planning to implement changes in this respect early next year. - Personal allowances and the capital gains annual exempt amount will no longer be available to those claiming the remittance basis of taxation.
- However, the de minimis level is increased from £1,000 to £2,000 per annum and those under 18 will not be subjected to the charge.
- Only individuals with overseas income and gains exceeding this amount annually will lose personal allowances and exemptions.
I am a Non Domiciled resident. What now?
Individuals can elect each year whether they wish to claim the remittance basis of taxation or not. However, there has been a levy introduced to long resident Non Doms: - Non-doms who are resident for 7 out of 10 years will have to pay a £30,000 levy each year to retain the remittance basis and they will lose personal allowances and capital gains annual exemptions.
- Those who are resident for 10 out of 12 years will have an increased levy of £50,000 a year.
- Those who are resident for 17 out of 20 years will be deemed UK-domiciled and loose the possibility of the remittance basis altogether.
The good news is that there are no changes to the inheritance tax (IHT) rules. This means that if you have been in the UK for less than 17 years you will not pay British IHT on your overseas assets. This will not be affected by whether or not you claim the remittance basis. As long as UK income is declared and tax is paid on it, there will be no need for you to disclose your worldwide income. St Matthew eAccounting can further advise you on the specifics of the changes of Non Dom legislation, help you claim the remittance basis, take as much paperwork as possible off your shoulders and communicate with the relevant authorities on your behalf. Interested? Get started now with a consultation!
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