Following a period of consultation, a written ministerial statement was released yesterday, 6 December 2011, regarding the taxation of non-domiciled individuals and the proposed new statutory residence test, both of which were announced by the Treasury in Budget 2011. See " Consultation on a UK Statutory Residence Test and Reform of Non-Domiciled Taxation Rules."
The Government has now confirmed that it plans to implement the full package of measures announced in Budget 2011 in a two step programme which will be completed in Finance Bill 2013.
The core reforms to non-domicile taxation will be included in the Finance Bill 2012 to take effect from 6 April 2012. This will include the higher £50,000 annual remittance basis charge for any non-UK-domiciled individual who has been resident in the UK for at least 12 of the previous 14 tax years, as well as the new business investment relief. This relief will enable non-domiciles to remit non-UK source income and gains to the UK to invest in eligible trading companies without creating a tax charge on the remittance, provided that the qualifying conditions are met. Certain other technical simplifications will also be implemented as proposed, including the exemption from capital gains tax on currency movements on foreign currency bank accounts and the ability to remit up to £10 of "nominated income" without triggering the complex and penal re-ordering rules.
The proposed new statutory residence test will now take effect from 6 April 2013 rather than April 2012 as previously expected. This has been delayed to facilitate further consultations on the detailed changes in this area. However, the Government has confirmed that it is still committed to the proposed statutory residence test and will make a further announcement in Budget 2012, which will include policy details and draft legislation. On a practical level, this means that there will be a further period of uncertainty.
The Treasury has also announced that it intends to make changes to the transfer of assets abroad legislation in Finance Bill 2013. At this stage, the details of the changes have not been announced, but draft legislation is expected around Budget 2012.
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