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HMRC guidance on new non-dom rules

HMRC guidance on new non-dom rules

New or revised HMRC guidance has been published covering changes to the rules for non-doms, offshore trusts and business investment relief.


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As had been awaited, HMRC have published guidance on the new rules for individuals who are non-UK domiciled and offshore trusts which take effect from 6 April 2017 and were legislated in the Finance (No.2) Act 2017. Non-UK domiciled individuals will need to make sure they are ready for these changes, and this guidance sets out an overview of the new rules for non-doms, offshore trusts and business investment relief.

This HMRC guidance, entitled Deemed Domicile changes from 6 April 2017, currently consists of the following:

Business investment relief (BIR) – The existing BIR guidance has been updated to include the Finance (No.2) Act 2017 changes.

Cleansing of mixed funds – This guidance provides a high level summary with examples of these transitional rules which allow a window up until 5 April 2019 to enable division of the income, capital gains, and ‘clean’ capital elements of existing non-UK bank accounts into separate accounts. If managed correctly, this would enable any non-dom who has previously been taxed on the remittance basis prior to 2017/18, to remit to the UK without a tax charge ‘clean’ capital from overseas which was previously trapped within a mixed fund.

Deemed domicile rules – A new short high level summary explaining the deemed domicile rules.

Overseas Workday Relief (OWR) – The existing guidance (RDR4) has been updated to include the Finance (No.2) Act 2017 changes.

Remittance Basis Changes – A new short high level summary explaining that individuals who become deemed domiciled will no longer be able to use the remittance basis and will be taxed on worldwide income and gains.

Residence, Domicile and Remittance Basis Guidance (RDR1) – The existing HMRC guidance set out in RDR1 has been updated and expanded to include the Finance (No.2) Act 2017 changes. RDR1 now includes basic guidance about the new deemed domicile rules for non-UK domiciled individuals who are long term UK residents.

Trust protections and capital gains tax changes – This new guidance, which takes the form of a detailed 54 page document, primarily covers the new rules for offshore trusts. This includes income tax and capital gains tax ‘protections’ for offshore trusts, transfer of assets abroad legislation trust protections, how trust protections can be lost through tainting and the valuation of benefits received from offshore trusts. In addition this guidance also covers the transitional rules enabling individuals becoming deemed domiciled in April 2017 to be able to benefit from rebasing of certain foreign assets to their market value on 5 April 2017. It also covers the changes to the rules for temporary non-residents, foreign loss elections and carried interest gains.

At the moment the documents published do not yet include guidance on the Finance (No. 2) Act 2017 provisions which extend the UK IHT net to all residential properties in the UK that are owned by non-doms, whether the non-doms and any companies that own the properties are resident in the UK or not. These changes include those who lend money or provide security to purchase UK residential property.

If you are a non-UK domiciled individual these new rules will impact you and there are actions you need to consider. For further information about the new rules affecting non-UK domiciled individuals please see our previous article Non-doms and non UK residents – big changes to tax rules.

If you would like further information please speak to Rob Luty or your usual KPMG contact.

For further information please contact:

Rob Luty

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