Advice for Non-Doms 2023-06-27T11:19:05+00:00

UK DOMICILE & RESIDENCE RULES – POST 2008

THE HISTORICAL BENEFITS FOR WEALTHY EXPATS MOVING TO THE UK MAY HAVE CHANGED POST 2008 BUT WITH CAREFUL PLANNING THE UK REMAINS A VERY ATTRACTIVE LOCATION!

Historically the United Kingdom and the Republic of Ireland are unique in Europe in making a distinction between a person’s domicile and residence for tax purposes. However, since Alistair Darling’s 2008 UK Budget the tax treatment of non-domiciled but resident individuals, whilst still beneficial, has changed significantly especially for those who have been ordinarily resident in the UK for 7 out of the previous 9 years. The current position is that the ‘traditional’ status quo still exists for those non-domiciled but UK resident individuals that have been in the UK for less than 7 out of the preceding 9 years. This means that a person deemed non-domiciled by Her Majesty’s Revenue & Customs (HMRC), is only subject to pay UK income and capital gains taxes on those sums physically remitted back to the UK and not on his/her worldwide income/capital gains as would otherwise have been deemed the case if they were UK domiciled. Further, if a distinction is made between a non-domiciled individual’s capital and income before becoming tax resident in the UK it is often possible to totally avoid exposure to UK taxes provided the individual only uses their pre-migration capital to live off and not any interest that may be accumulated post UK fiscal migration. Most importantly, despite these significant advantages all UK fiscal migrants, even those intending to stay in the UK for less than 7 years, will benefit from the UK’s extensive double taxation treaty network which can provide a higher degree of protection against 3rd provisions than would be the case if they chose to reside in a traditional tax haven such as Monaco or the Bahamas. In precis, it is now more important than every for any wealthy individuals or companies wishing to establish a UK presence to receive proper tax planning advice – A situation, that is going to be even more the case given the likely election of a Labour Government at the next general election.

At present, those who are non-UK domiciled but UK tax resident and have resided in the UK for more than 7 out of the last 9 years there are three possible results depending on the action or inaction taken, namely:

  • Where a non-domiciled but UK tax resident individual does nothing he or she will become taxed on their worldwide income and capital gains in a very similar manner to UK domiciled and resident individuals. Of course, just as for UK domiciled and resident individuals they will be able to use domestic tax planning tools to mitigate their tax exposure but not to a level that otherwise might have been possible;
  • Where a non-domiciled but resident individual elects to pay the annual £30-£50k duty, they can continue to benefit from the exemption on non-domiciled individuals having to pay income and capital gains tax on their worldwide assets. However, it should be noted that under Taxation of Chargeable Gains Act (TCGA), 1992, have been extended so that non- domiciled individuals, even when paying the duty, will now become subject to UK tax on all UK investments even when such investments have been made using an offshore company;
  • Where a domiciled or non-domiciled UK tax resident establishes a private interest foundation (PIF) this can both avoid the need to pay the annual £30-50k duty and also maintain the ability to invest in the UK using tax efficient companies without falling foul of the TCGA extended provisions.

THERE ARE STILL MANY NON-DOM TAX ADVANTAGES AVAILABLE PROVIDED EXPERT TAX ADVICE IS SOUGHT!

In précis, whilst the 2008 and subsequent Budgets have considerably restricted the historic benefits available to the non-domiciled but UK resident community there are nonetheless still significant advantages for wealthy foreign expatriates to move to the UK. For more information on these benefits please contact one of our tax planning consultants.

PRIORITY ENQUIRY FORM

(Strictly Confidential No Obligation)

    SCF Legal & Corporate Management Services Limited

    Address: 250 Kings Road, Chelsea, London SW3 5UE

    Telephone: 020 7731 2020   Email: enquiries@scfgroup.com

    Registration number: 05462416

    © SCF INTERNATIONAL 2023

    A FULL RANGE OF LEGAL, ACCOUNTANCY & COMPANY MANAGEMENT SERVICES

    The SCF International  specializes in providing accountancy and management services for UK and Irish limited companies, UK & Irish company management services including the provision of (where necessary) domestic directors, domestic company secretaries, registered office address services, trading offices, value added tax (VAT) registration and management, payroll (Pay as You Earn PAYE), opening up and managing UK or Irish bank account facilities, raising  invoices and any and/or all other services required to establish a bone fide managed and controlled UK or Irish limited liability company.

    Our in-house team of legally and accountancy qualified experts can also provide advice on current UK & Irish tax laws/provisions including anti-avoidance provisions, EU directives and regulations, the impact of BREXIT for both UK and EU based businesses and other relevant. In addition, where required the SCF Group can also set-up and arrange the management of companies in tax efficient EU based jurisdictions such as Cyprus, Luxembourg or Malta or indeed any jurisdiction in the world including those in the Middle and Far East.

    Property de-enveloping services – In conjunction with leading UK firms of solicitors SCF can help transfer companies currently held by what were known as ‘offshore’ companies into either more tax efficient UK companies or directly back into the names of individual beneficial owners’ often without attracting stamp duty land tax (SDLT) but still avoiding the advance tax on enveloped dwellings (ATED).

    Our fiscal migration and tax planning department is operated by qualified lawyers and accountants and can advise both domiciled and non-domiciled individuals on how to mitigate their individual and corporate tax exposure be it in the UK or abroad. Our legal & business department can provide specialized advice on all domestic and international tax planning issues but also upon ‘key’ issues such as asset protection be it in the form of trusts and private interest foundations (PIF’s). In particular, SCF can provide advice to those intending to relocate to the UK on how to do so in the most tax efficient way.