Key developments in the ever changing private client tax landscape during the course of 2015 include major changes to the ways in which non-domiciled and non-resident individuals are taxed, the planned introduction of a new inheritance tax nil rate band for homeowners, a three-pronged attack on buy to let landlords and ongoing anti-avoidance measures.
Proposed changes for non-doms
Perhaps the most important development has been the announcement by the government of significant changes to the ways in which non-domiciled individuals will be taxed from April 2017. Once those individuals have been tax resident in the UK for 15 of the previous 20 tax years, they will be deemed domiciled in the UK for all UK tax purposes.
The implications for those affected are hard hitting. At present, the remittance basis allows them to shelter from UK tax their non-UK income and gains, provided that they do not bring such income or gains to the UK. The remittance basis is viewed by many as being very generous and a major attraction for non-domiciled individuals moving to the UK. From April 2017, affected individuals will no longer be able to benefit from the remittance basis.
Such individuals will be deemed domiciled in the UK for UK IHT purposes. This means that all of their worldwide assets will be subject to IHT on their death, to the extent that their value exceeds the available IHT nil rate band and no exemptions or reliefs apply. This represents a minor change to the existing deemed domicile rule for IHT purposes, simply reducing the period from 17 down to 15 of the previous 20 years.
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