Non-domiciled and non-resident individuals

The Chancellor also has big changes in store for those who are able to use the remittance basis of taxation in relation to their foreign income and gains.

The headline issue was the proposed £30,000 charge for those who have been resident in the UK for seven years, but many of the changes buried in the small print will affect those paying tax on the remittance basis, who have not been resident for that long. These individuals will lose the benefit of the personal allowance, which could increase their tax bills by over £2,000 pa. There will also be a new definition of what constitutes a "remittance" of income and an end to the rule that says you cannot be taxed on income remitted in a year, if the source ceased in a previous year.

Individuals should consider remitting income from sources that have ceased in the current tax year, since the income may prove to be taxable if remitted after 5 April 2008.

Individuals who have entered into arrangements involving foreign trusts and companies should review what action to take before 5 April. It may be that gains should be realised and remitted to the UK before 5 April, particularly if there are UK assets held within the structure.

The major change for non residents is that the days of arrival and departure from the UK will count as days "in" the UK for the 183 day test and the 91 day test from 6 April 2008.

Contact us for further information on the changes, and how they may affect you.