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Thursday
Feb062014

Non-dom news

We have reported recently on changes to the tax status of UK non-domiciled residents. Today we present a round-up of the latest on those claiming non-dom status in the UK.

Back in November we wrote about the changes to inheritance tax rules for non-doms, and then just last month there was the news that there is now a higher charge for non-doms who have resided in the UK for 12 of the last 14 years.

Now the use of dual contracts by those claiming non-dom status is coming in for government scrutiny. Where two separate employment contracts exist for UK and non-UK duties, overseas earnings are taxable on the ‘remittance’ basis, which means that they are not subject to UK tax if they are kept outside the UK.

It is feared that some dual contracts are being artificially separated or that earnings are being disproportionately allocated overseas to take advantage of lower rates of taxation.

If an individual has both UK and overseas employment with the same or associated employers, and the overseas tax regime is not comparable to UK rates, the earnings may no longer be taxed on a remittance basis. The legislation is effective from April 6. It will not apply to overseas income that falls within the three year period for overseas workday relief

In other news, HMRC received six per cent more tax from non-doms in the last financial year, an increase of £10m on the previous twelve months.

Experts do not expect the recent changes to have much effect on the number of people who claim non-dom status, as the charges are still below what they might otherwise pay. A spokesperson from Vestra Wealth said: “Many non-doms are entrepreneurs. Allowing them to bring in money to fund businesses and create jobs is a very pro-business policy”.

Non-domiciled status is an attractive option for anyone who wishes to take advantage of the special arrangement in the UK, which will allow a foreign national to be resident in the UK and pay no tax on overseas earnings. There are potential savings of thousands of pounds, and here at St Matthew our experts will advise on whether you are eligible for non-dom status, and the resulting advantages. 

 

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