Last updated: 27 March 2017
Returning Brits to be taxed on worldwide income from April 2017
Affecting significant numbers of long-term British expats in Asia
Hong Kong/Singapore, 14 March 2017 – Following the UK Spring Budget last week, the reform of the non-domicile rules, previously announced in 2015, are destined to go ahead from 6 April 2017. The new tax regime will impact individuals born in the UK with a UK domicile of origin, who have subsequently left the UK and acquired a foreign domicile of choice (e.g. in Hong Kong or Singapore) and who now wish to return to live in the UK. Such individuals will no longer be able to benefit from the remittance basis of taxation, and will instead be liable to UK tax on their worldwide income, and capital gains and inheritance tax on their worldwide estate.
The big concern here is for any offshore trusts or companies these individuals have set up whilst living abroad because all trust and company income and capital gains will be taxed on them each year whilst they are a UK resident as if they had realised them personally. In addition, subject to a 12 month grace period, any trust for which the individual is a settlor and beneficiary will fall into the UK inheritance tax net for as long as the settlor remains UK resident.
Basically, the structure will be ignored for all UK tax purposes.
Carlo Gray, Partner and Head of Buzzacott in Hong Kong, commented, “There are significant UK tax changes ahead for British citizens born in the UK with a UK domicile of origin, which has subsequently been displaced by a domicile of choice after living many years outside the UK, as is so common in Hong Kong and Singapore. If those individuals wish to return to the UK to live for any reason, they will be subject to UK tax just like any other UK resident and domiciled taxpayer. We have had a flurry of enquiries recently in respect to Brits returning to the UK for work or for their children’s education and these new rules are resulting in them having to think very carefully about the implications and their long-term plans.
Article first seen on BritCham Hong Kong’s online news section.