Chancellor amends new non-dom tax rules
The government has made some concessions to critics of its plans to introduce a new tax regime for non-domiciles.
Some of the disclosure requirements of the proposed regime have been dropped, though the £30,000 annual flat charge remains.
The clarification of the regulations came in a letter sent by Dave Hartnett, the acting head of HM Revenue and Customs, to City firms and tax advisers.
Under the new tax regime non-domiciles who have been resident in the UK for seven out of ten years will have to pay a £30,000 charge in addition to tax on UK income.
However, the letter said that non-doms would not be required “to make any additional disclosures about their income and gains arising abroad. So long as they declare their remittances to the UK and pay UK tax on them, they will not be required to disclose information on the source of the remittances”.
The letter also said that “there will be no retrospection in the treatment of trusts and the tax changes will not apply to gains accrued or realised prior to the changes coming into effect”.
Money “brought into the UK to pay the £30,000 charge will not itself be taxable, and it will continue to be possible to bring art works into the UK for public display without incurring a charge to tax”.
The government will also continue to hold discussions with the US tax authorities on how Americans in the UK can make the £30,000 charge creditable against US tax.
Yvette Cooper, the Treasury Chief Secretary, said that misunderstandings over the government’s intentions had arisen as a result of the wording of the draft legislation.
Ms Cooper said: “We don’t need to know the detail of people’s worldwide income if they are going to be paying the £30,000.”
Business welcomed the news.
John Cridland, the CBI’s deputy director general, said: “This clarification is a victory for common sense. The fact that it was required at all demonstrates why business places so much value on proper consultation on such delicate matters.
“The proposals were clearly cobbled together in a hurry and went a lot further than the £30,000 headline figure, with the clauses on trusts and the retroactive aspects for taxing gains particularly punitive.”
Mr Cridland added: “We need the government to be more careful in future about sending out a message that Britain is no longer interested in attracting talent and ideas to our shores, or that those people already here, who contribute over £23bn to the UK economy each year, are no longer welcome. It should be saying the reverse.”?
Date:13 February 2008
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