| In the January issue, we
reported on controversial new rules
proposed by the government on residence
and domicile.
As you may remember, the Pre-Budget
Report announced that HMRC would be
changing the rules on residence and
domicile from 6 April 2008. The main
proposals were:
- individuals who are resident (but
not domiciled or ordinarily resident)
will generally have to make a claim to
be taxed under the favourable remittance
basis;
- individuals who are taxed on the
remittance basis will not be entitled to
the personal allowance or capital gains
tax annual exemption. There will be an
exception to this rule where the
unremitted foreign income and gains are
less than £1000;
- individuals who are resident (but
not domiciled or ordinarily resident)
for longer than seven out of the past
10 years will only be able to use the
remittance basis of taxation if they pay
an annual charge of £30,000, again
subject to the de minimis of £1,000; and
- amending the residence rules, so
that days of arrival and departure to
and from the UK will count towards
establishing residence.
There are many concerns about the new
rules and charges. The Daily Telegraph
reported that:
‘Low-paid foreign workers could be hit
by the Chancellor's plans to tax non-doms,
accountants have warned.
After an outcry from high-earning
people, the Institute of Chartered
Accountants in England and Wales (ICAEW)
said the changes will lead to "a tax rise
for large numbers of low-earning
non-domiciles".‘
HMRC issued a letter making some
changes to the rules. Some media outlets
reported a government climb down but that
is certainly not the case. Whilst certain
unintended consequences have been
clarified, all of the above details look
as though they will go ahead.
If you are potentially affected by
these rules or have any questions or
concerns please do get in touch.
Internet link:
Telegraph article and
HMRC letter |
