Good and bad news on UK non-doms and residence
DRAFT legislation for the 2012 UK Finance Bill, published on December 6, 2011, contains both good and bad news for non-UK domiciled taxpayers (non-doms) and also leaves some uncertainties.
“One major disappointment is the fact that the proposed statutory definition of residence is to be deferred until 2013, pending further consultation,” says Gill Smith, Head of Private Client Services at Moore Stephens LLP. “The present rules are not to be found in legislation but are based on cases decided by the courts, in some cases many years ago. Some taxpayers are in limbo because it is virtually impossible to determine their residence status with certainty, and it is disappointing that they will have to wait another year for the position to be resolved. Nevertheless, it is better to wait a year and emerge with workable rules than for the government to rush into making changes before it has got to grips with all the issues.”
For non-doms, the changes are as expected. One element of the package is being deferred until 2013, but this is a measure dealing specifically with individuals who are resident but not ordinarily resident in the UK, and who carry out duties in the UK and overseas under a single contract of employment. It will not affect most non-doms.
Gill Smith says, “It is disappointing, but not unexpected, that the government is sticking to its plan to increase to £50,000 the annual fixed charge for non-doms who want to use the remittance basis, for individuals who have been UK-resident in twelve out of the previous fourteen years. The relief from tax for amounts remitted to the UK for commercial business investment is very welcome, but many of the practical problems that were identified in the course of the consultation still remain. In addition, it is disappointing that investments in listed shares are excluded.”
There is one significant administrative simplification. “The capital gains tax exemption for gains and losses on withdrawals from bank accounts denominated in foreign currency is very welcome,” says Smith. “This applies to all individual taxpayers (and trustees), not just non-doms, but it will be particularly valuable in simplifying calculations for non-doms taxed on the arising basis, where the time spent in making calculations is often out of all proportion to the resultant gains.”
Moore Stephens LLP is noted for a number of industry specialisations and is widely acknowledged as a leading shipping and insurance adviser. Moore Stephens LLP is a member firm of Moore Stephens International Limited, one of the world's leading accounting and consulting associations, with 638 offices of independent member firms in 97 countries, employing 20,588 people and generating revenues in 2010 of $2.151 billion. www.moorestephens.com
“One major disappointment is the fact that the proposed statutory definition of residence is to be deferred until 2013, pending further consultation,” says Gill Smith, Head of Private Client Services at Moore Stephens LLP. “The present rules are not to be found in legislation but are based on cases decided by the courts, in some cases many years ago. Some taxpayers are in limbo because it is virtually impossible to determine their residence status with certainty, and it is disappointing that they will have to wait another year for the position to be resolved. Nevertheless, it is better to wait a year and emerge with workable rules than for the government to rush into making changes before it has got to grips with all the issues.”
For non-doms, the changes are as expected. One element of the package is being deferred until 2013, but this is a measure dealing specifically with individuals who are resident but not ordinarily resident in the UK, and who carry out duties in the UK and overseas under a single contract of employment. It will not affect most non-doms.
Gill Smith says, “It is disappointing, but not unexpected, that the government is sticking to its plan to increase to £50,000 the annual fixed charge for non-doms who want to use the remittance basis, for individuals who have been UK-resident in twelve out of the previous fourteen years. The relief from tax for amounts remitted to the UK for commercial business investment is very welcome, but many of the practical problems that were identified in the course of the consultation still remain. In addition, it is disappointing that investments in listed shares are excluded.”
There is one significant administrative simplification. “The capital gains tax exemption for gains and losses on withdrawals from bank accounts denominated in foreign currency is very welcome,” says Smith. “This applies to all individual taxpayers (and trustees), not just non-doms, but it will be particularly valuable in simplifying calculations for non-doms taxed on the arising basis, where the time spent in making calculations is often out of all proportion to the resultant gains.”
Moore Stephens LLP is noted for a number of industry specialisations and is widely acknowledged as a leading shipping and insurance adviser. Moore Stephens LLP is a member firm of Moore Stephens International Limited, one of the world's leading accounting and consulting associations, with 638 offices of independent member firms in 97 countries, employing 20,588 people and generating revenues in 2010 of $2.151 billion. www.moorestephens.com
Labels: Moore Stephens, UK non-doms and residence draft legislation
posted by Merlin Corporate Communications
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