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Non-domiciles warned to review tax affairs

Thursday, 06 December 2007

HM Revenue and Customs’ consultation document on residence and domicile is a call to action for many.

Leonie Kerswill, tax partner at Big Four firm PricewaterhouseCoopers, said that it is clear that the changes proposed in the consultation document on the tax treatment of residence and domicile go further than the much-publicised £30,000 levy.

“As expected the proposals include a significant tightening of the entire non-domicile tax regime which will affect most such people and significantly increase the amount of UK tax they have to pay – and may cause some to question whether it is worth staying here and investing in the UK," she added.

She said that one of the major concerns that the document raises is one of uncertainty. The consultation document does not include draft legislation, which is to be published ‘soon’.

The consultation closes on 28 February, only five weeks before the new rules will start. There is also a hint that there will be further changes after this first tranche.

“Non-domiciled people will want to review their tax affairs in light of the announcements. At the moment, however, there is no certainty as to what the rules are and it appears we will not know for definite until July 2008, three months after the changes take effect,” Kerswill said.

She recommends that people should consider the potential impact of these changes now to ensure they are not caught out by the rules when they come into force next year.

“They cannot afford to wait as they need to get their financial affairs in order before the end of the tax year in April,” Kerswill warned.

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