My client is a long-term resident of the UK for tax purposes. However, she is non-domiciled and has been using the remittance basis for her foreign income as it is below £2,000. As she will now have been here for 15 of the previous 20 tax years, will she be caught by the Deemed Domicile rules?
The short answer is no, she will not.
The Deemed Domicile rules only apply to certain claims such as people claiming the remittance basis as UK resident, non-domiciles with income or gains over £2,000.
The Deemed Domicile rules are contained in s835BA of the Income Tax Act 2007. In brief, they treat people who meet either of the conditions below as domiciled in the UK for tax purposes:
To meet this condition you must:
- be born in the UK
- have the UK as your domicile of origin
- be resident in the UK for 2017 to 2018, or later years
Condition B is met when you’ve been UK resident for at least 15 of the 20 tax years immediately before the relevant tax year.
The Deemed Domicile rules apply to claims for the remittance basis under 809B & 809E ITA 2007, but not to the remittance basis under s809D ITA 2007 (Application of remittance basis without claim where unremitted foreign income and gains under £2,000).
If your client does not complete a self-assessment tax return, she does not need to do anything to continue getting this treatment
If a self-assessment tax return is completed, she will need to tick the correct box on the Residence, remittance basis etc pages (SA109). Currently this is box 29.
Please note the rules for Deemed Domicile and inheritance tax are different, and may still be applicable.
Reference – Croner Taxwise