6th April 2008 saw the introduction of the controversial
new residence and domicile legislation. The new legislation
applies to non-domiciled individuals who have been present in
the UK for at least seven out of the last ten years.
The main change is that UK residents who are non-domiciled or
not usually resident will be required to pay a flat-rate annual
tax charge of £30,000 if they wish to continue being taxed
on a remittance basis rather than on their worldwide income and
gains.
If they do choose to pay the tax, they will also lose their
automatic entitlement to certain allowances, such as personal
allowance. The £30,000 is creditable against foreign
tax and income and gains in offshore trusts will only be taxed
when they are remitted to the UK.
A day classified as being spent in the UK is now based on whether
the individual is present at midnight, with exception to passengers
temporarily in the UK whilst travelling between two other places
in the world.
The decision to opt into the tax system can be made annually. Some
exemptions from the tax include those with unremitted foreign
income of less than £2,000, children and works of art brought
to the UK for restoration and repair or public display.
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