Tax centre
Pre-Budget Report 2007
Residence and domicile
Several important changes will take effect from 6 April2008:
- A non-domiciled individual who has been UK tax resident for seven or more years will only be able to use the remittance basis for taxation of their overseas income if they pay an additional tax charge of £30,000 a year. Years of residence before 6 April 2008 will be taken into account.
- Any individual who is UK tax resident, but not domiciled or not ordinarily resident, and who claims the remittance basis for taxing overseas income, will only be able to claim their personal allowances, married couple’s allowance and blind person’s allowance if their unremitted foreign income is below £1,000 a year.
- An individual’s days of departure and arrival will be counted as days of residence in the UK for tax purposes. At present they are normally excluded.
- There will also be a number of technical changes to the remittance basis of taxation. The definition of remittance will be extended. The ‘ceased source’ rule will be removed, so that it will no longer be possible to close down a bank account or other income source in one tax year and remit the funds to the UK in the next year with no tax liability.
As a consequence of these changes, from 6 April 2008 the current restrictions will be removed on the remittance treatment of investment and employment income from the Republic of Ireland for individuals who are UK tax resident, but not domiciled or not ordinarily resident.