Basel Group

Important changes to the UK tax rules for UK resident non domiciled individuals


The £30,000 remittance basis charged to UK resident non domiciled individuals is soon to be increasing to £50,000 BUT there’s great news as well.  The UK government has made major changes to the remittance rules themselves.  Effectively, if offshore funds (including accumulated income and gains) are remitted into the UK for "commercial investment in the UK" then those funds can be remitted into UK tax free.


The definition of "commercial investment into the UK" is broader than was anticipated.  It relates to companies that are substantially trading in the UK unless those companies are focused upon letting out residential property.  Importantly it will be possible to invest in companies developing and letting commercial property, financial services, manufacturing, retail, technology, importing goods etc. provided that the business is trading.  It also includes companies personally owned by the RND’s.    It will include AIM listed companies and unlisted companies BUT NOT main market listed companies.  There are no minimum or maximum time periods for the investment nor any minimum or maximum amounts.  The investment can be made in shares or loan stock issued by the company. 


Investment can be made either directly or through offshore structures including trusts.  This could create the resurgence of the offshore trust industry because gains realised through an offshore trust (if properly run) will be UK capital gains tax free.   


The company into which the investment is being made need not be a UK resident company as it can be made into a company which has a UK permanent establishment.


There are two anti avoidance rules of which you should be aware.  The first is that the sale proceeds of the investment must be taken out of the UK within two weeks or the original investment will be treated as a remittance into the UK.  The second issue is that all investment must be at arms length. 


Clearly there are a number of issues which need to be clarified but hopefully clarity will develop over the coming months.