Non-domiciled taxpayers who have not prepared for tax planning will be "hit hard" by changes coming into effect at the beginning of the financial year, MHA MacIntyre Hudson has warned.
Tax partner at the firm, Nigel May, said ‘non-doms' who have lived in the UK for 15 of the past 20 years will be deemed UK residents for all tax purposes from the start of the 2017 financial year on 6 April.
This was irrespective of when in the 20 years they came to the UK, he said.
The new rules also will also mean non-doms will be subject to Inheritance Tax (IHT) earlier, which is currently triggered after 17 years of living in the UK.
Meanwhile, UK taxpayers leaving the country will only lose their resident tax status after having lived outside the UK for up to six years, going up from the current IHT rule of three years.
May said: "Many will have made significant changes to their tax planning in preparation but, if they have not, the changes are likely to hit hard.
"The long-term resident non-dom will need to seriously consider the costs and other issues associated with the change."
The changes were introduced by former Chancellor George Osborne in the 2015 Budget.
They included UK income and capital gains taxes (CGT), which were previously excluded from non-dom taxation on overseas income and gains, for as long as taxpayers maintained their non-dom status and paid a ‘remittance basis' charge.
Warning for non-dom landlords
Non-doms who hold UK residential property through an intermediary will also be among those affected, May warned.
This includes, for example, an offshore trust holding shares in a non-resident company, which in turn owns UK residential property.
Previously such investment structures were regarded as ‘excluded property' and therefore not subject to IHT but they will be included within the scope of IHT from the beginning of the new tax year, May said.
There will be no exemption if the property is let out and no monetary threshold, so all properties will be included, he added.
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