Domicile Tax Changes

From April 2017, individuals who have been resident in the UK for more than 15 out of the past 20 tax years will be treated as domiciled in the United Kingdom for all tax purposes.  This will be known as the “15-year rule”.

This means that these individuals will have to pay UK income tax on their worldwide income, not just income which they bring into the UK (known as the “remittance basis”).  They will also be deemed domiciled in the UK for inheritance tax purposes.

Individuals who were born in the UK and had a domicile in the UK at their time of birth will revert back to having a UK domicile for tax years when they are treated as resident in the UK, even if they acquired a foreign domicile after birth.

Individuals who acquire a deemed UK domicile under the 15-year rule will lose it again once they leave the UK and have spent five years outside the UK.  This is likely to be relevant for inheritance tax purposes only.

Individuals who have a domicile of birth in the UK, acquire a foreign domicile and return to the UK will cease to be UK-domiciled when they leave the UK, so long as they satisfy the 15-year rule and have not acquired a domicile of choice in the UK.  Otherwise they will retain their deemed UK domicile for a further five years.

From April 2017 the government intends to bring all UK residential properties which are owned by foreign-domiciled persons within the charge to UK inheritance tax, even when the property is owned indirectly through an offshore company or partnership.  Currently only UK property which is owned directly by non-domiciled individuals is within the charge to inheritance tax.  From April 2017, trusts or individuals owning UK residential property through an offshore company or partnership will pay inheritance tax on this in the same way as UK-domiciled individuals.  This measure will only affect UK residential property and not other assets.

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Aug 16

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Cloud accounting provides us with a real time view of our business accounts at anytime and from anywhere. Sales and purchase invoices are easy to input in a user friendly way, and the bank account link allows us to pull across electronic bank account statements automatically. Reporting in cloud is so easy and at a glance the dashboard shows account balances, invoices owed to you and bills needed to pay, straight away highlighting any action required. You can quickly see the profit and loss account, balance sheet and all other reports, and can drill down into individual transactions. Our main server has also moved to the cloud, which has revolutionised the way we manage our business. As a small business with a couple of employees it allows us to spend more time tending to clients and less time managing accounts and systems, allowing us to work at home or on customer sites without having to go back to the office. The savings and benefits are SO DRAMATIC and INSTANT in terms of time required for data input.  Time spent on all of this is now LESS THAN 2 HOURS PER WEEK, and this would be impossible with our old systems and procedures.  Our profitability has increased too as we can now spend more time working on projects rather then admin.  Mike Potts, Ashwood Design

 
-- Mike Potts - Ashwood Design