One of the more fascinating aspects of the debate around the Non-domicile rule changes announced by the previous government in March, to come into effect in April, was the mismatch between the number of people threatening to leave, and the number of taxpayers actually impacted.
As the new rules are currently proposed, then the UK is actually more generous in the first four years of tax residence, as foreign income and gains will now be able to be remitted to the UK tax free. However, after 4 years, taxpayers will be taxable on their worldwide income, rather than on a remittance basis.
The existing rules permit up to seven years, with the possibility of extending that if taxpayers are prepared to pay a ‘charge’ rather than the tax.
HMRC released figures in August 2024 showing that there are at least 83,800 non-domiciled taxpayers in the UK, and of those, only 37,800 actually claimed the remittance basis.
Within that population, only 2,400 actually pay the remittance basis charge, meaning they have been in the UK for 7 years, and would rather pay £30,000 (or £60,000 after 12 years) than subject their worldwide income to taxation. Of course there is a large number of people in years 5, 6 or 7 of their stay in the UK who will lose out under the new rules, and they may be the ones most interested in leaving.
One thing that has always interested us at GETS HQ is the low numbers of remittance basis charge payers, and how that compares to the much large numbers of people talking about leaving. It seems that HMRC has noticed the same mis-match, as they have started sending letters to people who they believe have been in the UK long enough to be liable for the remittance basis charge. These letters invite them to review their last tax return and make any corrections that may be appropriate, and pay interest and penalties.
As with the chasing of foreign investment income that we blogged about earlier this year, this is an invitation to correct the returns first, rather than using the tools of prosecution.
If you have received one of these letters and are worried, please get in touch.
And if you are thinking about leaving the UK, and not just as a non-dom, then please get in touch also. GETS works closely with Henley & Partners – The Firm of Global Citizens to help people explore their residency options in countries all around the world.
Attachment : 7 of 9 previous nine tax years.pdf (icaew.com)