Enter Your E-mail

HMRC have published more detail on the amendments to the residence and domicile tax rules which were announced in the 2007 Pre-Budget Report.

The published documents are:

• draft legislation, covering day counting and the remittance basis of taxation (including the £30,000 charge and personal allowances for those claiming the remittance basis);
• explanatory notes in relation to the draft legislation; and
• a number of frequently asked questions and corresponding answers explaining the proposals.
   
  The documents are part of the Treasury's consultative document Paying a Fairer Share - a consultation on residence and domicile, which was published on 6 December 2007.

The new provisions will make a series of changes to the current rules:

• the residence rules will be amended, so that days of arrival in and departure from the UK will count towards establishing residence;
• individuals who are resident but not domiciled, or not ordinarily resident, in the UK will be required to make a claim in order to access the remittance basis of taxation for income and chargeable gains unless their unremitted foreign income and gains are less than £1000 . Individuals who opt for the remittance basis will lose their entitlement to personal allowances and the capital gains tax annual exempt amount;
• individuals who are resident but not domiciled, or not ordinarily resident, in the UK for longer than seven out of the past 10 years will only be able to access the remittance basis of taxation on payment of an annual charge of £30,000, unless their unremitted foreign income and/or gains are less than £1,000;
• the current rules will be amended to remove flaws and anomalies that allow individuals using the remittance basis to avoid paying tax on foreign income and gains where it is properly due.
  

The amendments in the draft legislation are to be put before Parliament in the 2008 Finance Bill. Subject to the Bill becoming law they will (broadly) take effect from 6th April 2008. However, HMRC have asked readers to note that the draft legislation is not in its final form and further amendments will need to be made to it, so it should be regarded as work in progress.

The deadline for responses to the consultation document is 28 February 2008 but comments on the draft legislation will be accepted beyond this date.