UK Resident Non-Domicile Updates

Recent announcements in the UK Summer Budget will affect long-term non-UK domiciled individuals who have been resident in the UK for 15 out of the last 20 years.  Some of the main issues arising from the Budget the announcements include:

  • from April 2017 UK resident non-domiciles who have resided in the UK for more than 15 out of the last 20 years will be deemed UK domiciled for all tax purposes
  • those affected by this ruling will no longer be able to benefit from the remittance basis on their personal assets as well as being deemed domiciled in the UK for inheritance tax purposes from the sixteenth year of their UK residency
  • it is possible that those who had a UK domicile at birth and who acquired a different domicile in another country will revert to having a UK domicile should they become resident in the UK
  • a new 'five year rule' means that those who have acquired UK domicile status in accordance with the changes from April 2017 (15 out of 20 year rule) will continue to have UK domicile status for inheritance tax purposes should they leave the UK permanently for more than five tax years
  • 'returnee domiciles' to the UK will be deemed UK domicile when they return to the UK but can lose the new UK domicile if they leave the UK subject to having not spent more than 15 years in the UK and not acquiring an actual domicile in the UK under general law during their return

Alongside the changes to foreign domiciled persons is a technical briefing paper on the changes by the UK government to bring all UK residential property held by an offshore company or offshore partnership under the remit of Inheritance Tax (IHT). 

What Action Should be taken?

We are advising our clients that any UK resident non-domiciles or those looking to return from a period outside the UK who may acquire UK domicile status upon their return should seek specialised UK tax advice on the consequences of the changes to be introduced in 2017.  Likewise we are advising clients with UK residential property held in offshore companies to seek specific tax advice on the consequences of the above changes.  We are very happy to liaise with tax intermediaries and advisors should there be a requirement to implement any restructuring of existing or new offshore structures.

August 2015