What do expats need to know about new UK non-dom changes?

Contributed by Select Property Group, 16 July, 2015

George Osborne has presided over the first all-Conservative Budget for 20 years - and there's big news for any expats claiming 'non-dom' status.

It was arguably one of the most significant Budget speeches ever for investors and overseas citizens connected with the UK.

On July 8th George Osborne delivered the first all-Conservative Budget for 20 years, and those that predicted a wide array of tax cuts were proved right, as the government outlines how it plans to reduce the national deficit as promised in the build up to the General Election in May.

And it was of particular importance for those citizens and expats that may be currently claiming 'non-domicile' tax status in the UK.

What is a non-domicile?

Simply put, a non-domicile (non-dom) is a UK resident who has their primary residence overseas.

The reason many decide to assign this status, or maintain it if it's been handed down by parents, is that they won't be charged tax on earnings or gains occurred outside of the UK, only on those you acquire in Britain.

So what's changing?

Mr Osborne has announced that, from April 2017, the permanent non-dom tax status will be abolished.

Although the tax status won't be completely eliminated in itself, those that have lived in the UK for 15 of the past 20 years will lose this right to claim and will now be subject to tax charges on all earnings, both domestically and internationally.

It's estimated that the change will generate an additional £1.5 billion in annual tax revenue for the British economy. The Chancellor stated that "it is not fair that people live in this country for very long periods of their lives, benefit from our public services, and yet operate under different tax rules from everyone else".

How does this affect me?

If you're an expat that is classed as a 'non-dom' but has spent 15 of the past 20 years in Britain, you will now need to be aware of the new tax charges you will face.

Also, these changes will have an impact if you were born in the UK to UK-domiciled parents, moved away but then returned and took up residency in Britain.

In his speech, Osborne used the example of a wealthy individual who would avoid Inheritance Tax by holding property in an offshore company.

What will this mean for my investment in the UK property market?

Of course if these changes do directly apply to you, then this poses wider financial concerns than simply just the extra tax you will now have to pay on your real estate.

But in truth, you shouldn't worry about how this will affect the property market in Britain as a whole.

What will be interesting to see, however, is the impact it will have on the prime central London market. As the traditional go-to hotspot for non-doms, will we continue to see the same high levels of property price inflation if a large number of these non-doms were to sell up and leave the market?

Tags: interest | Tax | inflation | investment | offshore | services | tax |

 

 





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