Our website uses cookies to enhance the visitor experience (what's a cookieCookies are small text files that are stored on your computer when you visit a website. They are mainly used as a way of improving the website functionalities or to provide more advanced statistical data.). Are you happy for us to use cookies during your visits?
Please note: continuing without making a choice equates to giving us your consent, which you can withdraw at any time via our cookies policy page.

Taxation of Non-Doms

Newsletter issue - June 08.

There has been much discussion in the quality newspapers about the taxation of wealthy non-doms, but what does that mean?

A person is non-domicile (non-dom) if they have a domicile of a country outside of the UK. Your domicile is not the same as your nationality or residence. It is the country that is your real or permanent home. This is generally the country your father considered to be his home country at the time of your birth. If you were born in the UK but your father was South African you have probably inherited the South African domicile of origin of your father. If you never intend to live in the country of your domicile of origin and you make your permanent home in the UK, the Taxman may assume you have chosen a UK domicile and have abandoned your domicile of origin.

Having non-dom status has some advantages for UK tax purposes, but many of those advantages have diminished since new tax rules were introduced on 6 April 2008. The main advantage was that income and gains you make overseas were not taxed in the UK unless you brought those funds into the UK. This is called the remittance basis.

The remittance basis can still apply for you if you are non-dom in three separate circumstances:

1. You have less than £2,000 of overseas income and gains per year.

2. You have lived in the UK for less than 7 out of the previous 9 tax years and you claim the remittance basis.

3. You have lived in the UK for more than 7 out of the previous 9 tax years and you pay an annual tax charge of £30,000 to be permitted to claim the remittance basis.

Remember, using the remittance basis means you can protect your overseas income from UK tax. Without the remittance basis you must declare all of your overseas income and gains on your UK tax return and pay UK tax on those funds even if they have already been taxed in another country, and have not been brought into the UK. Some relief for foreign tax paid may be possible. However, if you do claim the remittance basis for a particular tax year you will lose your UK personal allowances and annual capital gains allowance for that tax year.

This is a very complex area of tax law, so we need to discuss your personal situation before we can advise you fully.

  • Auto enrolment icon

    Auto Enrolment

    Workplace pensions rules are changing.
    Be prepared for auto enrolment, see how we
    can help and read up on our guidance notes.

    More

  • Cloud accounting icon

    Cloud Accounting

    With our online bookkeeping packages, our support
    services are only a click away.
    Discover cloud accountancy solutions to bring your finances up to date.
    More

  • Pay less tax icon

    Pay Less Tax

    Our experienced tax advisors can help you
    make the most of your options to reduce
    your tax bills.

    More

  • Make more profit icon

    Make More Profit

    From business plans to management accounts,
    our business services will ensure you are in
    control of your business finances.

    More

  • Source finance icon

    Source Finance

    Our experienced partners can guide you
    in getting the finance you need to make
    your business grow. Read our guides or
    contact us for a free consultation.
    More

  • Outsource your payroll icon

    Outsource Your Payroll

    Let us handle payroll compliance for your
    business. We can deal with HMRC on your
    behalf, and take the stress out of RTI.

    More