Non-domiciliary UK Tax Compliance

The UK tax rules are attractive for non-UK domiciliaries (non-doms).

Non-doms can be taxed on the remittance basis so that non-UK source income and gains are only subject to tax if brought into the UK. Turcan Connell can advise on the remittance rules and structuring clean capital accounts, in addition to attending to your ongoing UK tax compliance requirements.

UK Inheritance Tax Advice for Non-doms

Non-doms are only liable to UK inheritance tax on their UK situated assets. Even where a non-dom retains strong ties to their home jurisdiction they could still fall within the scope of UK inheritance tax on their worldwide assets. Turcan Connell can advise and implement structures to permanently hold assets outside the scope of UK inheritance tax

The UK inheritance tax rules also treat anyone who has been UK resident for 15 out of the preceding tax years as “deemed” UK domiciled and therefore their worldwide assets are within the scope of UK inheritance tax. It is essential that non-UK assets are held through specific excluded property structures for UK inheritance tax purposes before this deemed domicile rule applies to an individual so that non-UK assets remain outside the scope of UK inheritance tax.

UK Residential Property Tax for Non-Doms 

Traditionally, high value residential property was held and managed through corporate structures for non-UK domiciliaries. In recent years such structures have come within the scope of extra tax. An annual tax on enveloped dwellings (ATED) applies on residential property valued at over £0.5million held through corporate structures. Capital gains tax has been extended to apply residential property held through corporate structures and UK inheritance tax also applies.

Turcan Connell can advise on de-enveloping and implementing alternative holding structures for residential property for non-doms.

Inheritance Tax for Non-domiciled Spouses

Unwelcome inheritance tax charges can result where a UK domiciliary leaves or gifts assets to their non-UK domiciled spouse. These rules can result in 40% inheritance tax applying on the first death, and in some situations, the same assets suffering inheritance tax at 40% on the second death. It is possible for a non-UK domiciled spouse to elect to be UK domiciled but this will only be attractive to some "mixed domicile" married couples and taking advice on the consequences from such an election and planning in advance is strongly recommended.

For further information and advice on non-dom tax compliance in the UK, contact one of our specialists today.

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