New Matters

Considerable changes to the UK taxation of Non-Domiciled individuals were introduced in the 2008 Finance Act taking effect for the tax year beginning April 6 2008 and subsequent years.

Prior to 2008/09 individuals who were regarded as not domiciled in the UK were only taxed in the UK on income either arising in the UK or remitted to the UK. Consequently even though someone was considered as Resident in the UK they would not pay UK tax on their foreign income if it were not remitted (transferred) to the UK.

However, that has now changed, and the non domiciled individual finds himself with an increased tax burden for maintaining this status. Broadly speaking, the changes can be broken down into 3 categories.

Individuals who have been resident in the UK for less than 7 years and whose unremitted foreign income is less than £2000 will see no change to their UK tax liability.

Individuals who have been resident in the UK for less than 7 years and whose unremitted foreign income is greater than £2000 are no longer entitled to claim the UK Personal Allowance in calculating their tax liability. For 2008/09 this amounts to £6035 or £2414 in extra tax for the higher rate taxpayer.

Once an individual has been resident in the UK for more than 7 out of the previous 9 tax years they will be subject to tax on their worldwide income on an arising basis or, if they wish to utilise the Remittance Basis for foreign income, be subject to a £30,000 annual tax charge

This is a brief overview of the changes from a purely UK perspective and takes no account of how these changes would impact the American citizen filing a Federal Return. Please contact us to ascertain how the changes impact on your own situation.

UK Tax

US Tax