It is good to be able to report that government has decided not to impose a three-year minimum claim period for the remittance basis of taxation.
Last Friday, the Government published a summary of the responses it received following the publication of a Consultative Document in late January, and unsurprisingly all the responses were against it. In practice, the persuasive factor is likely to have been the wider reforms to the non-UK dom tax system announced in the Summer Budget on 8th July.
The document sets out current thinking on the taxation of non-UK doms, and included the following:-
3.1 The government wants the UK to be a destination that will attract talented people to work and to do business. Having a tax system that is internationally competitive brings in talent and investment which contributes to the growth of the economy. The UK’s rules for those who are not domiciled here are important in attracting people to live and to work here. The government remains committed to that aim. However, the government also wants the system to be fair. It believes that those who choose to live in the UK for a long time should pay taxes here like everybody else.
3.2 As a result, at Summer Budget 2015 the government announced significant reforms to the taxation of non-UK domiciled individuals. These included:
- from April 2017, anybody who has been resident in the UK for more than 15 of the past 20 tax years will be deemed to be domiciled in the UK for tax purposes; and
- from April 2017, individuals who are born in the UK to parents who are domiciled here, will no longer be able to claim non-domiciled status whilst they are resident in the UK.
3.3 As a result of these reforms and the responses to the consultation, the government also announced that it will not introduce a minimum claim period for the remittance basis charge or restrict the ability of individuals to pay the charge in future years when an individual opts out of paying it. The government has concluded that bringing an end to the permanent non-UK domicile status diminishes the opportunity for long-term UK residents to structure their affairs to reduce exposure to the charge over an extended period. The government will monitor the response to the reform of the taxation of non-UK domiciled individuals to ensure the rules operate as intended.
We will, of course, monitor the proposed changes to the rules for taxing non-doms as the Consultation process continues, and post updates as and when relevant.