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Technical updates - Published 18th February 2015

New £90,000 remittance basis charge for non-doms

New £90,000 remittance basis charge for non-doms may be unwelcome, but is unlikely to drive anyone overseas (DK approved).

From April 2015 people who have been resident but not domiciled in the UK for at least 17 of the last 20 tax years will face a new remittance basis charge (RBC) of £90,000. In addition, the current charge of £50,000 for those resident for at least 12 of the last 14 tax years will increase to £60,000. However, the £30,000 charge for those resident for seven of the last nine years remains unchanged.

The increase is not surprising. The UK remains a very desirable location for people with international wealth. One reason is that those who are UK resident but not domiciled can earn millions of pounds overseas yet pay no UK tax so long as they keep the funds overseas.

Consequently, the £90,000 annual charge is a relatively small sum – roughly equal to the income tax that would be due on a UK salary of £230,000.

The Government is also considering making the election for the RBC to apply for a minimum of three years. This new rule is designed to prevent perceived abuse of the current rules, where an election to pay the charge is a one-off in a year in which they have a significant level of offshore income or realise a large gain offshore. Should the change be implemented, individuals will need to carefully consider whether to elect for the RBC, as the cost of an election could be £270,000. The change is unlikely to have an impact on those who have
sufficiently large amounts of unremitted offshore income and gains each year such as to warrant payment of the remittance basis charge.

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