Light at the end of the tunnel for non-UK domiciles?
Thu 17 Mar 2016
Non-UK assets can be rebased to market value at 6 April 2017 for those non-UK domiciles who become deemed domiciled in the UK for all taxes from 6 April 2017.
As previously announced, non-UK domiciled individuals will be deemed domiciled in the UK for all taxes from 6 April 2017 where they have been UK resident for 15 out of the past 20 tax years.
Any capital gain on non-UK assets from 6 April 2017 would then have been subject to tax in the UK and in many cases this would include the gain accruing at a time when they were not deemed domiciled.
For those that would have become deemed domiciled from 6 April 2017, the temptation would have been to crystallise capital gains on non-UK assets prior to 6 April 2017 and claim the remittance basis so as the capital gain is not subject to UK tax unless it is remitted to the UK.
HMRC have confirmed that they will allow a rebasing of non-UK assets to market value at 6 April 2017 thereby potentially removing the gain accruing up to that date. They did a similar rebasing for offshore trusts in 2008 which required an election.
Non-UK domiciles therefore need to consider the commercial aspects as to whether to crystallise capital gains on non-UK assets before 6 April 2017 or take the benefit of the rebasing election. The cost of obtaining valuations at 6 April 2017 also needs to be considered where there are unquoted shares or property.
Non-UK domiciles will therefore be eager to get more details from HMRC on how the rebasing will actually work so they can prepare for the deemed domiciled rules from 6 April 2017.
If you have any queries over how these new rules may impact you please contact:
Rakesh Dabasia rakesh.dabasia@mazars.co.uk
Paul Barham paul.barham@mazars.co.uk
Liz Ritchie liz.ritchie@mazars.com
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