Deemed domicile: draft legislation for Summer Finance Bill

On 13 July 2017, HMRC published some draft legislation for Finance Bill (No.2) 2017 with minor amendments for the Deemed Domicile rules.

The provisions will be back-dated and apply from 6 April 2017:

A new concept of Deemed Domicile for income and capital gains tax purposes for long term UK residents.
The legislation applies to individuals who have been resident in the UK for fifteen of the last twenty years or who were both born in the UK and have a domicile of origin here; interestingly, the deemed domicile rules do not distinguish between UK jurisdictions.

The new legislation clarifies the proposed rules for cleansing mixed funds, and these will apply to amounts held prior to 6 April 2008.

Under the current rules, remittances from an account containing funds from multiple sources are subject to a strict ordering, with income transferred first.
Until 5 April 2019, offshore transfers between accounts can be the subject of an election to specify which of the funds in account A are being transferred into account B. This allows the capital in account A to be “cleaned”, which would allow it to be remitted without tax consequences.

For assistance as a non-domciled individual or in respect of IHT and offshore companies please contact the Virtual Tax Partner helpline.

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