I am a non-dom - how am I affected? | KPMG | UK
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Draft Finance Bill 2017: I am a non-dom - how am I affected?

I am a non-dom - how am I affected?

Non-doms, resident in the UK for 15 out of 20 years, will be deemed domiciled for all UK taxes, along with ‘returners’ with a UK domicile of origin.


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Who should read this?

Non-UK domiciled but UK-resident individuals, those born in the UK who have acquired a domicile of choice elsewhere but who might return to the UK, and those who advise them.


Summary of proposal 

What’s the issue?

From April 2017 non-UK domiciled individuals who are long-term UK residents will become deemed UK domiciled for all UK taxes, aligning the income tax and capital gains tax treatment with the current deemed domicile rules for inheritance tax.

In addition, individuals born in the UK with a UK domicile of origin who have acquired a non-UK domicile of choice elsewhere will be deemed domiciled in the UK once they return to the UK (returners).

How is deemed domicile defined post 6 April 2017?

Non-UK domiciled individuals will become deemed UK domiciled for all UK taxes once they have been resident in the UK for 15 of the past 20 tax years. 

The 15/20 test is based on the number of years that an individual has been resident in the UK, and will include years of residence in the UK where the individual was under the age of 18.  

To determine whether or not an individual is resident in the UK in a particular tax year for the purposes of the 15/20 test, for 2013/14 and later tax years the statutory residence test (SRT) will apply.  For tax years prior to 2013/14, an individual’s residence will be determined in accordance with case law rules and HMRC practice in force during the relevant tax year. 

For the 15/20 test, any tax year which is a split year for the SRT will nonetheless be counted as a year in which the individual is UK resident.

Can deemed domicile status be lost?

An individual can lose their deemed-UK domiciled status for income tax and capital gains tax purposes if they become non-UK resident and remain non-resident for at least six consecutive tax years.   However, an individual will only need to leave the UK and remain non-UK resident for four consecutive UK tax years to lose their deemed UK domicile for IHT purposes.

If an individual does break their deemed domicile status in this way but subsequently comes back to the UK, they will be eligible to claim the remittance basis until the 15/20 test is met once more, assuming they retain their non-UK domiciled status under general law.

What about ‘returning non-doms’?

Individuals born in the UK with a UK domicile of origin who have acquired a non-UK domicile of choice under general law will become immediately deemed domiciled for income tax and capital gains tax purposes if and for so long as they are UK resident after 5 April 2017.  

However, by concession there will be a grace period for inheritance tax purposes only, designed to prevent such ‘returning’ individuals who only plan to stay in the UK for a short time from being unfairly impacted. For example, this should prevent such people from having to rewrite their Wills. Therefore, returning non-doms will not be treated as deemed domiciled in the UK unless they have been resident for at least one of the two years prior to the year in question.

The IHT changes for returning non-doms could have a significant impact on any non-UK structures which were established during a period of non-residency.

What are the consequences of becoming deemed domiciled?

Both UK resident individuals who are deemed domiciled in the UK under the 15/20 rule and ‘returning’ non-doms will be subject to income tax and capital gains tax on their worldwide income and gains (respectively). The remittance basis will not be available to them, subject to the £2,000 de minimis below.

Foreign income arising and foreign gains realised prior to the tax year in which the individual becomes UK resident and deemed domiciled, in respect of which the remittance basis is claimed, will continue to be subject to UK tax only if they are brought to the UK. This will mean that ongoing care is needed in respect of funds from prior years which have not been subject to UK tax. 

Going forward, a UK resident and deemed domiciled individual whose foreign income and gains in a tax year do not exceed £2,000 and which are not brought to the UK, will not be subject to UK tax on those income/gains (no claim for the remittance basis will be required).

Whilst deemed domiciled in the UK an individual’s worldwide assets will be liable to IHT on certain lifetime gifts and, importantly, on death.

Do non-doms need to take any action before 5 April 2017?

While these deeming provisions were first announced in the 2015 Summer Budget, the draft clauses of Finance Bill 2017 were only published by the Government on 5 December 2016.  Therefore, the challenge is for affected taxpayers to assess what these changes will mean for them prior to 6 April 2017, after when the remittance basis can no longer be claimed.

Non-doms need to:

  • understand whether they will become deemed domiciled on 6 April 2017;
  • determine what their UK tax liability will look like on the arising basis; and
  • consider what needs to be done between now and 5 April 2017 to ensure that they remain fully compliant with the new rules after 6 April 2017, and to allow sufficient time to implement any necessary changes. 

For further information see

Big changes for non doms

Statutory Residence Test

UK residential property


Mike Walker

+44 (0)20 7311 8620


Alexander Marcham

+44 (0)20 7311 4976


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