Non-Domiciled UK individuals

Individuals resident in the UK who have previously enjoyed non-domiciled status are facing the prospect of considerable changes to their tax position. In the Summer 2015 Budget it was announced that considerable changes would be made to the tax regime for non-domiciled individuals, which would bring to an end the considerable benefits that many have enjoyed in the past from being non-domiciled in the UK.

Domicile is the country a person officially has as their permanent home or has a substantial connection with. It is not the same as nationality, citizenship or residence. There are three types of domicile: domicile of origin, domicile of dependence and domicile of choice. One’s domicile is important in determining the income tax, Capital Gains Tax and Inheritance Tax position.

The changes being brought in are wide ranging. One of the advantages of being non-domiciled in the UK was that individuals were only liable to UK Inheritance Tax on UK situs assets. The new rules, effective from 6 April 2017, will bring all UK residential properties held either directly or indirectly into the UK Inheritance Tax net.

The rules for when a non-domiciled individual will become deemed domiciled for Inheritance Tax purposes are also changing and also affecting remittance basis users. Currently an individual is considered to be deemed domiciled for UK Inheritance Tax purposes if they have been UK resident for 17 of the previous 20 years. From 6 April 2017, an individual will be considered deemed domiciled if they have been UK resident for 15 of the previous 20 years. Those becoming deemed domiciled will be subject to UK income tax and Capital Gains Tax on their worldwide income and gains from the 16th tax year without access to the remittance basis of taxation and Inheritance Tax on worldwide assets.

Please download our Briefing Note on the upcoming changes for non-domiciled individuals.

If you are affected by the changes outlined, please contact Lancaster Knox for advice and guidance on the options available.

Download a PDF of the full resource