New Domicile Rules Part 1

New domicile rules

Significant structural changes introduced from 6 April 2017

Permanent non-dom tax status will be abolished from 6 April 2017. The reform does not eliminate the tax status, but individuals who have lived in the UK for 15 of the past 20 years will lose the right to claim it.

The proposed measures:

People who have been resident for more than 15 out of the past 20 years will be deemed domicile for all tax purposes, so no remittance basis will be available. Those who came to the UK in 2002 or earlier will be affected. No grandfathering of the old rules is proposed

The £90,000 remittance basis charge for those who have been resident for 17 out of 20 years will no longer apply, as those individuals will be taxable on the arising basis

Deemed domicile status can only be lost after an absence of at least five tax years (compared to the current four)

Individuals who return to the UK after living abroad, but were born with a UK domicile, will not be able to use the remittance basis even if they have acquired a domicile in another country

Non-doms who have set up Excluded Property Trusts (EPTs) prior to becoming deemed domiciled under the new 15-year rule will not pay tax on income and gains within the trust and will retain their beneficial Inheritance Tax (IHT) treatment, except for UK residential property

IHT will be due on UK residential property held in any offshore structure.

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