The draft legislation, which will form part of this year’s Finance Bill, was not published with the majority of other clauses last December.
One of the key announcements from George Osborne’s post-election Budget was of changes to domicile for tax purposes. Following a consultation last autumn, draft legislation in relation to Inheritance Tax (IHT) was published alongside other draft clauses for Finance Bill 2016 in December. HMRC have now also published the draft clauses relating to income tax and capital gains tax (CGT), along with a Tax Information and Impact Note (TIIN) entitled Domicile: Income Tax and Capital Gains Tax and an explanatory note.
In essence, the draft legislation is largely as expected, and introduces a new concept of ‘deemed domicile’ in the UK for income tax and CGT purposes with effect from 6 April 2017. As a reminder, the broad underlying policy intention is that long-term UK residents and ‘UK returners’ – see below - will be treated as deemed domiciled and taxed in the same way as those with UK domicile under law – that is, on their worldwide income and gains on an arising basis.
An individual not domiciled in the UK in a tax year will be deemed UK domiciled for tax purposes if either:
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