Insights: Non-domiciled UK residents and Remittance
On 20th August 2021, HMRC confirmed that it would be writing to non-domiciled taxpayers who have lived in the UK for either seven years out of the previous nine tax years, or 12 out of the last 14, who have filed their 2019-20 tax returns but who subsequently may still need to the remittance basis charge (RBC) or move to the arising basis.
UK non-domicile remittance regime
The non-domicile rules allow those individuals resident in the UK with an overseas domicile to access the alternative remittance regime whereby their UK tax position is limited to UK source income and gains and any overseas income and gains that are remitted to the UK.
HMRC statistical information issued on 27th July 2021 confirmed 75,700 non-domiciled individuals are claiming the remittance basis. Of the 75,700 that statistical information estimated that some 1900 individuals were liable to pay RBC, 1400 would be liable to pay the £30,000 amount, and only 500 liable to pay the higher £60,000.
However, from time to time, non-domicile individuals will forget the need to pay the charge. They will continue to file, claiming the remittance basis, unaware of the requirement to pay the RBC. It has also been the case that some (a small minority) will deliberately not pay the charge. The default risk position in those cases is that the individual should be taxed.
Action on receipt of the letter
HMRC has confirmed that where it is aware that an agent is acting, it will also write to the agent. Given that most non-domicile clients will engage a tax adviser to file their return, the chances are high that the agent will become aware of the HMRC letter.
On receipt of a letter, it is always advisable to take some time to consider the wider risks and issues. As stated, the letters provide helpful examples of common errors which are in themselves a useful guide to some of the things that the tax adviser should be thinking about.
If you are planning on moving to the UK, you need the best advice and specialists. The UK tax system is strict, and you must plan your lifestyle funding well in advance. WIM Accountants can help you make your claim and will endeavour to guide you every step of the way. This blog post aims to serve as a basic introduction to non-domicile status in the UK, but if you have more queries or would like to have a chat about our services feel free to contact us.