Loans and overseas income & gains
Current Issues | Tax | 11th November 2015
On 4 August 2014, HMRC announced that non-domiciled individuals using foreign income and gains as collateral for loans used in the UK would be treated as making a taxable remittance of the loan. They gave a deadline of 5 April 2016 for non-doms to repay or replace with UK assets any foreign income or gains used as collateral for loans in accordance with a written undertaking given by 31 December 2015.
This announcement led to much discussion with representative professional bodies who felt that some loan arrangements would prove difficult or impossible to rearrange within the time period. As a result, HMRC announced on 15 October 2015 that 'after careful consideration' it had decided not to ‘seek to apply the change announced on 4 August 2014 to arrangements where the loan was brought into or used before that date’.
There is therefore no longer any need for loans that were brought into or used in the UK before 4 August 2014, to be repaid or re-financed. However, all loans taken out on or after 4 August 2014 which use foreign income or gains as collateral will be treated as a taxable remittance.
Specific advice should be obtained before taking action, or refraining from taking action, on any of the subjects covered above. If you would like advice or further information, please speak to your usual Shipleys contact.