Six year-end tax issues for non-doms in the UK
By Kirsten Hastings, 31 Jan 17
The approaching tax year-end applies equally to those born in the UK and to foreign expats living there. This year, expats may have even more to consider given the new non-dom rules coming into force from 6 April 2017, warns Old Mutual Wealth’s financial planning expert, Rachael Griffin.
IHT implications for those living in the UK for 15 years
From 6 April 2017, the calculation used to determine when a foreign expat (non-UK-domicile) living in the UK becomes deemed UK domiciled for tax purposes will tighten.
The timescale will reduce from 17 out of 20 years to 15 out of 20 years.
For anyone approaching the 15-year deadline, they will need to take advice regarding inheritance tax (IHT), as once they become deemed UK domicile they will become liable to UK IHT on their world-wide assets.
Implications for those on the remittance basis approaching the 15-year deadline
Foreign expats living in the UK can choose to pay tax on a ‘remittance basis’, which means they are not required to pay UK tax on their foreign assets. Once a foreign expat has been in the UK for five years, they need to start paying HM Revenue & Customs a charge each year to remain on the remittance basis.
They can continue on the remittance basis until they become deemed UK domiciled (which will be once they have been in the UK for 15 out of 20 years).
Those on the remittance basis approaching this 15 year deadline may benefit from taking immediate action.
They have a window of opportunity to help ensure their overseas finances are structured in the best way possible. For example, assets can be placed in an Excluded Property Trust, a legitimate way of mitigating any income and capital gains tax arising from assets held outside the UK.
Assets will need to be placed inside the trust before they become deemed UK domiciled.
Tags: IHT | Non Doms | Old Mutual
