Revised non dom rules set out in draft legislation

Proposed non dom rules will see certain individuals treated as UK domiciles for income tax, capital gains tax and inheritance tax purposes, with revised guidance issued and effective from 6 April 2017

Under the plans, an individual not domiciled in the United Kingdom at a time in a tax year is to be regarded as domiciled in the United Kingdom at that time if one of two conditions are met.

The first condition is that either the individual was born in the UK or the individual’s domicile of origin was in the UK, and the individual is UK resident for the relevant tax year.

The second condition is that the individual has been UK resident for at least 15 of the 20 tax years immediately preceding the relevant tax year. But the second condition is not met if the individual is not UK resident for the relevant tax year, and there is no tax year beginning after 5 April 2017 and preceding the relevant tax year in which the person was UK resident.

Non doms who have a non-UK resident trust set up before they become deemed-domiciled in the UK will not be taxed on income and gains arising outside the UK and retained in the trust.

HMRC's impact note shows that it expects to generate £995m by the end of 2020-21 through the measure

It added transitional protections, including the ability to rebase offshore assets for CGT purposes, are expected to cost the Exchequer approximately £20m per year from April 2018.

There had been calls in some quarters for a delay to the implementation of the rules, but they will apply from 6 April 2017.

The draft legislation Deemed domicile - Income Tax, Capital Gains Tax and Inheritance Tax can be read here.

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