The United Kingdom (UK) introduced new rules with effect from 6 April 2017 which can deem a UK resident individual to have a UK domicile in certain circumstances on or after that date. Changing to UK domiciled status can broaden the scope of UK tax on income, capital gains and inheritances. Detailed insights on the consequences of becoming deemed UK domiciled are discussed in a previous TaxWatch article, which is available to view here.
Important transitional reliefs are available to individuals in certain circumstances where they became deemed UK domiciled on 6 April 2017. To avail of these reliefs, action must be taken by certain deadlines which are fast approaching.
In this article, Johnny Hanna takes a look at some of the transitional reliefs available, who is eligible, what actions need to be taken to avail of the reliefs and the deadline for taking those actions.
UK tax resident individuals who are deemed UK domiciled under the new rules from April 2017, or who are likely to become deemed UK domiciled in the future, need to review now monies held by them in non-UK bank accounts as well as their capital assets. This is in order to assess whether action is required to avail (or not) of the transitional reliefs available in relation to the cleansing of mixed funds accounts and the rebasing of the tax deductible amount related to gains that might arise on the future disposal of capital assets.