Non-dom system needs real simplification
The Chancellor’s announcement in today’s Budget about increasing the levy on UK residents who are not domiciled in the UK needs to be balanced by a real assault on the complexity of the system, says the Chartered Institute of Taxation (CIOT).
Today the Chancellor has:
- announced an increase in the £30,000 annual charge to £50,000 for certain longer-term residents;
- removed the tax charge where remittances are made for commercial investment in the UK;
- promised to simplify some of the rules around the remittance basis; and
- announced that no further substantive changes will be made during the current Parliament.
John Whiting, Tax Policy Director of the CIOT said:
“It is up to the Chancellor to judge the appropriate level of the non-dom charge, but what is really needed is a simpler, more certain basis for the levy. The exemption for commercial investment is eminently sensible and the promise of a review of the complexities in the remittance rules is welcome. But in many ways we think the remittance rules are so overcomplex as to really need a complete rethink.
“There is a lot to be said for complementing the plan to introduce a statutory residence test with a review of the domicile rules.”
Notes for editors
- The remittance basis for those not domiciled in the UK was much restricted by the Finance Act 2008, which introduced the £30,000 annual charge for users of the remittance basis who have been resident in the UK for seven out of the last nine years.
- The Chancellor announced today that the £30,000 annual charge will be increased to £50,000 for those non-domiciles who have been UK resident for 12 or more years and who wish to continue to use the remittance basis.
- The Chancellor announced consultations on these changes, to take effect from April 2012.
23 March 2011