End of permanent non-domicile status
Government proposals will bring permanent non-domicile status to an end from 6 April 2017.
A person will then be deemed to be domiciled in the UK for all tax purposes once they have been resident in the UK for
at least 15 out of the previous 20 tax years.
The 15 out of 20 year rule
Some planning may be still be possible. For example, you could be UK resident for 15 years, be non-resident for six years, and then be resident for another 15 years without becoming deemed domiciled for any of these years.
The proposals include protection for offshore trusts provided the trust is set up before a person becomes deemed domiciled. Income and gains retained within the trust will be protected from the tax implications of the settlor becoming deemed domiciled. Offshore trusts will also remain effective for inheritance tax purposes.
So if you have surplus assets, consider transferring them into trust prior to being caught under the deeming provisions. Of course once deemed domiciled, the exemption will not apply where you, your spouse or your children receive any benefit from the trust.
If you are non-domiciled but UK resident for 15 or more years, you might need to think about leaving the UK for a sufficient period to reset the year count. If you are already overseas, you will need to carefully plan the date of your return.
Be in contact with our team if you would like to discuss this further.
T: 020 7376 9333
E: info@figurit.com