US Confirms Non-Domicile Charge Eligible for Tax ReliefPrintPdfClose »

31/10/2011

Since 6th April 2008, any UK resident adult who has been in the UK for 7 out of the past 10 years has had to pay a £30,000 charge to elect to be taxed on a remittance basis.

The remittance basis means that income and gains arising overseas are taxed in the UK only when, and if, they are brought into the UK. The £30,000 charge is in addition to any Tax due on UK income and gains or any foreign income and gains that have been remitted into the UK during the tax year.

From 6th April 2012, the existing £30,000 annual charge for non-domiciled individuals claiming the remittance basis will increase to £50,000 for those resident in the UK for 12 years or more.

US taxpayers who are not domiciled in the United Kingdom for UK tax purposes will welcome the announcement that if they choose to be taxed on the remittance basis and pay the remittance basis charge (RBC), the RBC will be creditable against their US tax liability (under Section 901 of the US Tax Code). 

US tax is levied on a ‘world income’ basis, with exemptions for non-residence. Double taxation relief is given in appropriate circumstances against taxes paid on income and capital gains. Because the RBC is not a tax on income per se, but a charge for having one’s income treated a certain way, the US Internal Revenue Service had previously indicated that double taxation relief might not be available on it unless the relevant income was subject to US income tax.

If you are non-UK domiciled and require advice on your Tax affairs, please contact us:

Malcolm Emery

PARTNER
T: 01626 202355
Email Me