UK Non-Doms Urged To Plan Their Tax Affairs

By Editorial 19 October, 2011

Non-domiciled individuals should seek advice on the UK tax system, as tax planning opportunities may remain available to them, a leading firm of chartered accountants has said.

According to Midgley Snelling, tax advice should be sought by the UK’s ‘non-doms’, who may be able to take advantage of tax benefits dependent upon a number of factors, including the length of residence in the UK. However, the firm has also warned that calculating these factors can be a complicated process, meaning help is often needed.

Managing Partner Robin Sewell, elaborated: “The UK tax rules that apply to non-doms are complex but there are still worthwhile opportunities to take advantage of that status.”

“While advice should ideally be sought before becoming a resident in the UK, it is always worth overseas nationals checking if any tax planning opportunities are still available – regardless of how long they have been resident”, Sewell added.

Sewell stressed that care “must be taken in the implementation of any planning”, and noted that the proper recording of overseas income, gains and assets is key.

The UK has seen a significant fall in numbers registering for non-domiciled status, as the introduction of an annual levy and changes to inheritance tax laws bite. It was reported in May that there had been a 16,000 drop since the introduction in 2008 of a GBP30,000 levy on those "non-doms" residing in the UK for more than seven years.

UK 'Non-dom' status is typically claimed by those born outside of the UK but who are long-term residents of the country. It means that while they pay tax on their UK earnings, their foreign earnings are not subject to UK tax as long as it remains offshore.

At the last Budget, the government announced that the non-dom levy would increase to GBP50,000 for those with 12 years residence in the UK, a measure which is expected to raise GBP200m in additional revenues in the coming years.

However, in return for this increase, Osborne also announced his intention to encourage investment by removing the charge payable by non-doms for the remittance of foreign income or capital gains to the UK for the purpose of investing in a UK business. In addition, the government has pledged not to introduce any further changes to the non-dom system during the life of the current parliament, due for dissolution in 2015.

A consultation on the non-dom budget proposals was launched in June this year, and closed on September 9, 2011.

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