Summer Budget 2015 – Non-domiciled individuals

Non-domiciled individuals have historically received favourable tax treatment in the UK as they have been able to take advantage of the remittance basis of taxation for income tax and capital gains tax purposes. Similarly, for inheritance tax purposes, non-doms have only been subject to tax on assets situated in the UK (although, in most cases, once they have been resident in the UK for 17 out of the last 20 years, they would be regarded as having a deemed domicile in the UK and would be subject to inheritance tax on their worldwide estate).

With effect from April 2017, it is proposed that a number of changes will be made to the existing rules. These changes are subject to a detailed consultation which will be published after the summer recess but the basic intention is to remove the ability for non-domiciled individuals who have been resident in the UK for more than 15 out of the past 20 years to use the remittance basis for income tax and capital gains tax purposes. It is also intended that long term UK resident non-domiciled individuals (using the 15 out of 20 year rule) pay inheritance tax on their worldwide assets.

Further measures are being introduced, from April 2017, so that all UK residential property owned either directly or indirectly by foreign domiciled persons not caught by the above rules is subject to inheritance tax. This measure will ensure that non-domiciled individuals are not able to achieve inheritance tax savings by arranging their affairs so that they indirectly own UK residential property via an offshore company or similar structure.

If you would like more information on this subject, or anything else covered in the Summer Budget 2015, please contact a member of the Tax Team in your local office – or email us at action@wrightvigar.co.uk – we would be delighted to help you.