24 September 2021
Nudge Nudge – HMRC Send Nudge Letters to Non-Domiciles Regarding Unpaid Tax
HMRC has recently sent out hundreds of letters to individuals with a non-domiciled status ("non-doms") who they believe may not have declared the correct income/gains on their tax returns, or failed to pay the remittance basis charge.
Non-Doms and the Remittance Basis
Domicile is a common law concept that refers to the country that a person treats as their permanent home, or has a substantial connection with. Non-dom therefore refers to an individual who is domiciled outside of the UK.
Where an individual is UK tax resident in a given tax year, then in the absence of any reliefs or elections, they will be subject to tax in the UK on their worldwide income. However, for UK tax resident non-dom individuals there this the option to claim for foreign income/gains to be taxed under the remittance basis.
Under the remittance basis, the individual's income/gains would only be taxed in the UK if it is brought in to the UK, or used or enjoyed in the UK. If it is kept offshore, it is free of UK tax.
However, there is a charge to claim the remittance basis where an individual has been tax resident in the UK for a number of years as follows:
- £30,000 for non-domiciled individuals who have been resident in the UK for at least 7 of the previous 9 tax years immediately before the relevant tax year
- £60,000 for non-domiciled individuals who have been resident in the UK for at least 12 of the previous 14 tax years immediately before the relevant tax year