Non doms: rebasing opportunity in April
We mentioned a fund un-mixing opportunity for non-doms in a previous article. There is another opportunity for non-doms this year, albeit only available to non-doms who become deemed domiciled in April 2017 and that have actually paid the Remittance Basis Charge (RBC) in a previous tax year. In order to become deemed domiciled in the UK in April, one needs to have been resident for at least 15 of the last 20 tax years. If the RBC has been paid in a previous tax year past, it will be possible to rebase any assets which hold unrealised capital gains as of 5th April 2017. If those assets are then sold and remitted into the UK, only gains that accrue after April 2017 will be taxable in the UK.
Rebasing applies on an asset-by-asset basis and there will is no requirement that any part of the sales proceeds relating to the part of the gain which arose before April 2017 should be left outside the UK. Where the asset was originally purchased with clean capital, the entire proceeds from the disposal can be brought to the UK without triggering a remittance. However, where it was purchased wholly or partly with foreign income and gains, an element of the disposal proceeds will still relate to those income and gains and so will be subject to the remittance basis in the normal way when the proceeds are brought to the UK.
It's also important to note the following:
- The asset disposed of needs to be a personally held non-UK situated asset (or if it has been a UK situated asset in the past, it ceased to be so from 16 March 2016 until 5 April 2017).
- Rebasing is not available for assets held in trust nor to assets to give rise to IT rather than CGT (eg. offshore bonds).
- The individual must become deemed domiciled on 6 April 2017.
- The Remittance Basis Charge (RBC) must have been paid for at least one tax year. Claiming the remittance basis is insufficient on its own.
- And lastly, the individual must not be a 'formerly domiciled resident', meaning someone born in the UK with a UK domicile of origin.