Residence and domicile
Several important changes will take effect from 6 April
2008:
- A non-domiciled individual who has been UK tax resident
for seven or more years will only be able to use the remittance
basis for taxation of their overseas income if they pay
an additional tax charge of £30,000 a year. Years
of residence before 6 April 2008 will be taken into account.
- Any individual who is UK tax resident, but not domiciled
or not ordinarily resident, and who claims the remittance
basis for taxing overseas income, will only be able to
claim their personal allowances, married couple’s
allowance and blind person’s allowance if their unremitted
foreign income is below £1,000 a year.
- An individual’s days of departure and arrival will
be counted as days of residence in the UK for tax purposes.
At present they are normally excluded.
- There will also be a number of technical changes to the
remittance basis of taxation. The definition of remittance
will be extended. The ‘ceased source’ rule
will be removed, so that it will no longer be possible
to close down a bank account or other income source in
one tax year and remit the funds to the UK in the next
year with no tax liability.
As a consequence of these changes, from 6 April
2008 the current restrictions will be removed on the remittance
treatment of investment and employment income from the Republic
of Ireland for individuals who are UK tax resident, but not
domiciled or not ordinarily resident.
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