Domicile and Residence potential changes in the UK
HM Revenue & Customs published PBRN 18 and as whe have seen in previous years when the domicile or residence rules are threatened by the HMRC, a significant ammount of noise is generated in the accounting profession.
Some of my UK non resident clients living in Spain raised their concerns with this legislation. A very good discussion can be found in Lisa Spearman's Tax plus blog
The main discussion is who is likely to be affected?
The answer is, UK residents paying tax on the remittance basis and non-resident individuals who spend a significant amount of time in the UK.
General description of the measure
Legislation will be introduced in Finance Bill 2008 to:
• Introduce an additional tax charge for individuals using the remittance basis of taxation;
• End the automatic entitlement to certain personal allowances for individuals resident in the UK who are using the remittance basis;
• Ensure that when determining if an individual is resident in the UK in any year, days of arrival and departure are counted; and
• Address a range of anomalies in the remittance basis.
The remittance basis of taxation can apply to those UK residents who are not domiciled in the UK or who are not ordinarily resident in the UK. The remittance basis provides that such residents will be taxed on foreign income and gains only when they are remitted to the UK.
Operative date
All these changes will apply on or after 6 April 2008.
