The 2011 Budget has announced that non-domiciled individuals who want to use the remittance basis of taxation will face a flat rate charge of £50,000 when they have been UK resident for 12 or more tax years. The £30,000 charge remains for non-doms resident for seven or more tax years. Legislation will also be introduced to remove the tax charge on remittances made for the purpose of commercial investment into British business. This will be a welcome concession. A consultation process has started on the precise detail of the new rules, and a consultation document is expected in June 2011.
The Chancellor George Osborne has also confirmed that a consultation process is ongoing with a view to introducing a long-awaited statutory residence test from April 2012. The hope is that a statutory test will remove some of the uncertainty resulting from interpreting Her Majesty’s Revenue & Customs’ guidance on residence status. It is encouraging that the Chancellor has announced that he wants to make the British tax system the most competitive in the world. A range of other measures have also been announced to encourage investment in British business and a review of the 50% tax rate has been promised. We await the international community’s reaction to the proposals.