HMRC made significant changes to non-UK domiciled individuals, which were implemented from 6 April 2017. Once you have been UK resident for at least 15 out of the last 20 tax years, you will be deemed to be UK domiciled. This removes your entitlement to claim the remittance basis and so you will then be taxed in the UK on your worldwide income and gains.
With this in mind, HMRC accepts that you may wish to bring funds to the UK to sustain your lifestyle going forward. If you have claimed the remittance basis previously, you should be aware that you would be subject to UK tax if you remit any offshore income or gains in the year of the remittance. This would cause a problem for you if you have mixed accounts containing clean capital as well as income and gains - as you would be deemed to be remitting the income/ gains before the tax-free capital.
HMRC has provided a two-year window to rectify this problem, which ends on 5th April 2019. You can now take the opportunity to segregate your clean capital, income and gains to enable you to bring your funds to the UK in the most tax efficient way.
To benefit from this opportunity, you must have been taxed on a remittance basis for at least one tax year between 6 April 2008 and 5 April 2017 and not have a UK domicile of origin. We can help you look at whether it could be beneficial to submit an amended tax return for 2016/17 to take advantage of this one-off opportunity.
The cleansing of mixed funds can only be achieved using cash within your accounts so it may be the ideal time to sell your assets to segregate any clean capital tied up within them. The value of the income/ gains within the accounts should be identified to allow for the segregation into new overseas bank accounts. Please note that you can only make one transfer from the transferor account to the transferee account so you must ensure your accounts have been analysed in detail.
You should also be aware that you must ensure that you have supporting evidence for the source of funds if you make subsequently remittances as HMRC may choose to enquire into this.
If you have funds held overseas which you would like to remit to the UK, please get in touch with the tax team at DRG Chartered Accountants. We would be delighted to hear from you.
DISCLAIMER: This information is for guidance only, and professional advice should be obtained before acting on any information contained herein. We will not accept any responsibility for loss to any person as a result of action taken or refrained from in consequence of the contents of this publication.
