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Sweeping reforms to non-dom rules

This article is from the autumn 2015 edition of Shipshape

The summer Budget proposed major changes to the rules for non-UK domicilied individuals. From 6 April 2017, anyone who has been a UK resident for 15 of the last 20 years will no longer qualify for non-dom status and will be deemed UK domiciled for income tax, capital gains tax and inheritance tax (IHT) purposes.

For IHT, this is a change from the current rule under which a non-dom is deemed UK domiciled if they have been UK resident for at least 17 of the last 20 tax years. However, double tax treaties may apply and could have an impact on this.

In addition, anyone born in the UK with a UK domicile of origin who has acquired a new domicile elsewhere will be deemed domiciled in the UK if they become UK resident.

The Government also proposes that UK residential property indirectly held by non-doms through offshore vehicles will be subject to UK IHT from April 2017.

Deemed domicile status will continue for five tax years after the non-dom ceases to be UK resident. The Government will consult on the effect of this on the existing position for IHT and on other aspects of the proposals.

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