Domicile and remittance

FORTHCOMING CHANGE: Abolition of non-dom regime and introduction of residence-based IHT regime

At Autumn Budget 2024 on 30 October 2024, the Labour government confirmed that it will proceed with plans of the former Conservative administration to abolish the remittance basis of taxation and replace it with a residence-based regime, to commence on 6 April 2025. The government also confirmed its intention to move to a residence-based regime for inheritance tax. The changes will also affect the rules determining excluded property status, the abolition of protected settlements status of offshore trusts, and changes to overseas workday relief.

For information on these changes, including draft legislation published with Autumn Budget 2024, see: Autumn Budget 2024—Private Client analysis—International, Autumn Budget 2024—reforming the taxation of non-doms, Autumn Budget 2024 (paras 2.56 and 5.51), Autumn Budget 2024: Overview of tax legislation and rates (para 1.3) and Policy paper: Reforming the taxation of non-UK domiciled individuals .

Abolition of domicile and remittance as bases of taxation

From 6 April 2025, the concept of domicile as a relevant connecting factor in the UK tax system will be replaced

To view the latest version of this document and thousands of others like it, sign-in with LexisNexis or register for a free trial.

TAKE A FREE TRIAL

Latest Tax News

Upper Tribunal denies SDLT overpayment relief in failed late MDR claim (L-L-O Contracting Ltd and others v HMRC)

Tax analysis: In L-L-O Contracting Ltd and others v HMRC, the Upper Tribunal (UT) dismissed the companies’ appeals against the First-tier Tax Tribunal’s (FTT) decision to dismiss appeals against HMRC’s decision not to allow claims to SDLT overpayment relief. The companies had not claimed multiple dwellings relief (MDR) in their SDLT returns and, having missed the time limit for making the claims, sought to obtain the relief by way of overpayment relief claims under paragraph 34 of Schedule 10 of the Finance Act 2003 (FA 2003).

FTT concludes cider supplies did not benefit from temporary reduced VAT rate (JD Wetherspoon PLC v HMRC)

Tax analysis: In JD Wetherspoon PLC v HMRC, the FTT decided that for the purposes of the temporary reduced VAT rate for hospitality and tourism, cider should be classified as an ‘alcoholic beverage’ and thus excluded from the reduced rate. The issue arose because a drafting error in the relevant legislation meant that cider was not included in the definition of an alcoholic beverage, however, the FTT applied the Inco principle to correct obvious drafting errors, and the taxpayer claim was therefore dismissed.

FTT finds that director loan was not written off or released on liquidation (Quillan v HMRC)

Tax analysis: In Quillan, the First-tier Tax Tribunal (FTT) allowed the taxpayer’s appeal, finding that his director loan account balance was neither written off nor released for the purposes of section 415(1) of the Income Tax (Trading and Other Income) Act 2005 (ITTOIA 2005) on the liquidation of the company, contrary to HMRC’s guidance on this area in its Company Taxation Manual.

Sizeable refunds could follow taxpayer’s FTT win as HMRC directed to issue enquiry closure notices in ten-year dispute (Refinitiv Ltd v HMRC)

Tax analysis: In Refinitiv Ltd v HMRC, the First-tier Tax Tribunal (FTT) directed that HMRC issue closure notices in respect of enquiries into 2018 corporation tax returns, averring that it had not met the burden of proof required for the enquiries to be kept open.