The UK is currently conducting a consultation on measures changing the rules for non-UK domiciled individuals. The changes are to be included in the Finance Bill 2016 and are to take effect from 6 April 2017. Draft legislation has been introduced to deem some non-domiciled individuals as UK domiciled for UK income tax and capital gains tax purposes.

Under the draft legislation non-domiciled individuals would be deemed to be UK domiciled for the purposes of UK income tax and capital gains tax when they have been resident in the UK for 15 of the past 20 years. The new rule is similar to a deemed domicile rule being introduced for UK inheritance tax purposes.

Non domiciled individuals who have been resident in the UK for less than 15 of the past 20 years will still be required to pay the remittance basis charge, which is currently GBP 30,000 for non-domiciled individuals resident in the UK for at least 7 of the past 9 years and GBP 60,000 for those resident in the UK for at least 12 of the past 14 years. There is also currently a remittance basis charge of GBP 90,000 for non domiciled individuals resident in the UK for at least 17 of the past 20 years but this would no longer apply once the draft legislation is passed and comes into force.

When the legislation was announced the government also intended to include some exceptions to the deemed domicile treatment. These would relate to income and gains retained in a long term trust settled by an individual before coming within the deemed domicile rules, so no tax liability would arise while the income and gains were retained in the trust. These planned exceptions to the deemed domicile status have not been included in the draft legislation, but the government intends to include them in the Finance Bill 2017.