Our resident US tax expert Alistair Bambridge was recently invited to write an article (see below) for The American magazine, a monthly publication for American ex-pats living and working the UK, following the announcement made in the summer 2015 budget that the non-domicile tax status will be abolished from April 2017. To read Alistair's original article in The American magazine please click here - it is featured on page 7!
Chancellor George Osborne has announced that the permanent non-domiciled (non-dom) tax status will be abolished, with the aim being to raise £1.5bn in additional tax.
From April 2017, anybody who has been resident in the UK for more than 15 of the past 20 tax years will be deemed UK domiciled for tax purposes. Furthermore, it will no longer be possible for somebody who is born in the UK to parents who are UK domiciled to claim non-domicile status if they leave but then return and take up residency in the UK.
There are an estimated 114,000 UK residents currently claiming to be non-domiciled, of which 1,750 were born in Britain. The status allows many to only pay tax on UK earnings, and avoid inheritance taxes. UK residents have been able to avoid UK tax by owning UK assets such as homes and art collections through offshore companies in order to avoid any UK tax charge on increases in their value.
If you will be caught by the new rules, from April 2017, the UK will have the right to tax you on your worldwide income and you will be subject to inheritance tax in the UK. There is still enough time to plan for the new measures – you will still be able to retain UK homes and send your children to school here, but you will need to spend a reduced number of days in the UK.
If you have any questions, or would like more information on how the new non-domicile tax status may affect you, please contact us on 020 3757 9290 or email us.