Capital Gains Tax (CGT) for Non-Domiciled Investors

The rules regarding Non Domiciled individuals have been subject to many changes over the last few years and the position is frequently misunderstood by advisers and taxpayers alike.

The following considers only the Capital Gains Tax consequences, but you should also be aware of the impact of domicile on other taxes such as Income Tax and Inheritance Tax.

From 2017/18 tax year onwards any individual resident in the UK for 15 or more of the previous 20 tax years will be deemed UK domiciled for tax purposes.

Any individual with a UK domicile of origin who has acquired a non-UK domicile of choice but later decides to return to the UK will be treated as UK domiciled for any year that they are UK resident.

Individuals who are UK resident and UK domiciled are liable for CGT on their worldwide capital gains.

Individuals who are UK resident but not UK domiciled remain liable for CGT on capital gains arising from the disposal of UK assets but may opt to only be liable for CGT on “foreign” capital gains if and when they remit their disposal proceeds back into the UK, this is known as “remittance basis”.

Any adult’s, resident in the UK for seven years or more of the last nine tax years who opt to use the remittance basis must pay the annual charge known as “remittance basis charge” which is £30,000 in 2017/18, this charge will increase to £60,000 for adult’s resident in the UK for 12 or more years in the last 14 tax years, however if the overseas unremitted income and gains is less than £2,000 then remittance charge won’t apply.

All UK residents that are claiming the remittance basis will lose their personal allowance and CGT annual exemptions if they have overseas income or gains over £2,000.

This is a complex area subject to many changes over the years.

If you have any questions regarding capital gains or any other aspect of UK tax please contact us on ​​​[email protected].