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 |
