Mercer & Hole’s comment: Now What for Non Doms?
Yesterday’s speech by Ed Miliband has certainly ruffled some feathers and produced a high level of media coverage. The media tends to oversimplify matters and it is not so easy to be regarded as non UK domiciled as they may portray. HMRC is more rigorous in determining whether an individual has become UK domiciled than they have been in the past.
There are already changes proposed relating to the remittance basis in addition to the recent increases in the remittance basis charge so whatever the outcome of the election, non domiciliaries will have to review and possibly rearrange their affairs. However, simply leaving the UK may not be an effective option. Under the statutory residence test it is not always straightforward to become not UK resident and hence remove oneself from the system at least in the short term. This combined with the personal upheaval involved in a move may have an impact on the number of people who leave the UK as a result of any such change. In many cases those of more modest wealth have already stopped using the remittance basis but they can still be adversely affected by changes in the law since the impact of technical changes is often greater in these cases.
If the remittance basis is to be removed, leaving tax planning aside, there will at the very least be complexities around tax compliance in identifying the income for UK purposes from some types of foreign investments. Double tax relief under the numerous UK treaties will also be much more in point than it is at present. There will be increased costs to the individuals and to HMRC in operating worldwide taxation in such circumstances. The various exchange of information agreements such as FATCA or the UK/Swiss agreement will also be affected and close watch will be required on the detail.
It is hard to see how HMRC could bring in wholesale changes without full consultation and consideration so for now I suggest that the message is don’t panic (yet) but let’s take stock in due course. We will of course be monitoring developments closely and will keep you informed. If you do have immediate concerns and would like to talk to us then please call me or your usual Mercer & Hole contact.
Date: 9th April, 2015
Articles from this Author
15th December, 2016
The good news part 1: Capital Gains Tax (CGT) rebasing
26th November, 2015
Non Dom update - Autumn Statement
8th July, 2015
Doomed doms? The impact of changes for non doms
7th May, 2015
Holiday Homes in Europe
Contact a Private Client Partner
“Good luck to everyone who has also made it as a finalist, I look forward to awards evening later on in the year”-L… twitter.com/i/web/status/8…
For the latest Mercer & Hole news, visit our LinkedIn page mercer-&-hole