The rule changes, due to come into force in April next year, mean that non-UK domiciles who have resided in the country for more than 15 of the past 20 tax years will now automatically be deemed UK-domiciled.
CGT on overseas assets
As a result, those in the process of changing their tax status to UK domiciled on or after 6 April 2017, will be exempt from paying capital gains tax (CGT) on the sale of any assets held oversees.
Instead they will only be liable to pay CGT on any gains accumulated from that date – saving them thousands of pounds in tax.
Griffin said: “The budget has potentially delivered a real boost to non-UK domiciles holding assets overseas, especially those who have invested in overseas property and built up substantial gains over the years.
“They may no longer need to worry about disposing of their overseas asset before they become UK domiciled, helping them make the right long-term financial decisions.”
Remittance tax basis
Under the current system, non-doms living in the UK can choose between paying UK tax on all overseas income and gains as and when the liability arises or they can choose to be taxed under the remittance basis – whereby they will only be taxed if the gain is brought to the UK. If they chose the remittance basis they have to pay a tiered remittance basis charge.
Those using the remittance basis are not liable to pay CGT in the UK on the sale of overseas assets – which in the past meant many non-doms rushed to sell foreign assets before they lost their tax status and became UK domiciled. However, the new reforms mean that they no longer have to do this as all gains up until 6 April 2017 may be exempt from CGT anyway.
Uncertainty
According to Griffin, non-doms face uncertainty following the chancellor’s announcement as to whether they should act now or wait until the finer details of the reforms are revealed later in the year.
Most at risk are those approaching their 15 year non-dom deadline who have a limited amount of time in which to sell their overseas properties before they become UK domiciled.
She said: “Non-UK domiciles will need to stay on top of any changes being proposed, and be prepared to act quickly if changes are made, especially if they have been in the UK for 15 out of 20 tax years.”
