(October 1, 2015)
On September 30, 2015 on the website of the UK Government a media release was published via which the UK HM Treasury announced that it opened a public consultation with respect to its intended reforms to the taxation of non-domiciles.
According to the consultation document, the consultation closes on November 11, 2015.
In the Introduction of the Consultation document the following is stated:
“This consultation document sets out the detail of the proposals which restrict certain individuals from claiming non-dom status for tax purposes. A ‘deemed domicile rule’ will be introduced so that long term residents of the UK can no longer claim to be not domiciled for tax purposes. This abolishes the permanency of non-dom status. The new rules will also ensure that individuals who are born in the UK and who are UK domiciled at birth will not be able to claim that they are not domiciled for tax purposes while they are living in the UK.
This consultation seeks views on how legislation should best be introduced in Finance Bill 2016 to achieve these aims. It seeks views on how the government can introduce these reforms in the most effective way without any unfair or unintended outcomes. Responses are invited from any interested parties, including individuals, advisers and representative and professional bodies.
The government has also announced that it will legislate so that inheritance tax is charged on all UK residential property, including property held indirectly by non-doms through a structure such as an offshore company or a trust. This change is intended for the 2017 Finance Bill and a separate consultation will be published to seek views on the detail of this proposal.”
The proposals discussed in the consultation document are at stage 2 (determining the best option and developing a framework for implementation including detailed policy design) of the government’s tax consultation framework. Given the relatively short timeframe between publication of this consultation and the anticipated date for publication of the draft Finance Bill 2016, the UK government has decided to hold a shorter consultation than the usual 12 week period.
The Consultation Document discusses a.o. the following subjects:
· Introduction
o Policy aim
o Structure of the document
o Stage of consultation
o Planned timeframe
o How to respond
· Current rules for taxing non-domiciles
· Deemed UK domicile for long-term residents
o Legislating the deemed test
§ Split years/statutory residence test
§ Effect of the reforms
§ £2,000 de-minimis rule
o Treatment of offshore trusts
o Further consequences
§ Ensuring compliance for tax purposes on foreign income and gains
§ Capital losses election
o Implications for inheritance tax
§ IHT for UK domiciles leaving the UK
§ Potentially exempt transfers
§ Spousal election
· Born in the UK with a UK domicile of origin
o Born in the UK
o Impacts of the reforms
o Leaving the UK
o Consultation questions
· Draft legislation
· The consultation process
Click here to be forwarded to the consultation document as available on UK.GOV, which will open in a new window.
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