The new rules on domicile and remittance fundamentally change the structure of the basic earnings tax provisions
The changes made to the rules governing domicile by the Finance Act 2008 were among the most controversial in the budget. Accountants and tax advisers have a year in hand to get used to the changes, and the simplest place to start is with a look at the practical impact of the 2008 amendments on the current main taxing provisions. HMRC have issued a useful summary of the legislation affected for agents’ use. All changes have effect for earnings on or after 6 April 2008.
The former impact of the provision is listed in brackets and the new version following the 2008 changes is emboldened:
l Income Tax Earnings and Pensions Act 2003 (ITEPA 2003), Pt 2, Ch 4, s 15 (earnings for year when employee resident, ordinarily resident and domiciled in UK) –amended to deal with earnings for year when employee is resident in UK only
l ITEPA 2003, Pt 2, Ch 5, s21 (earnings for year when employee is resident and ordinary resident but not domiciled in the UK, except chargeable earnings overseas –omitted
l ITEPA 2003, Pt 2, Ch 5, s 22 (chargeable overseas earnings for a year when employee resident and ordinarily resident, but not domiciled in UK) –amended to deal with chargeable overseas earnings for a year when the remittance basis applies and the employee is ordinarily resident in UK
l ITEPA 2003, Pt 2, Ch 5, s 25 (UK-based earnings for year when employee resident, but not ordinarily resident in UK –omitted
l ITEPA 2003, Pt 2, Ch 5, s 26 (foreign earnings for a year when the employee is resident, but not ordinarily resident in the UK) –amended to deal with foreign earnings for a year when the remittance basis applies and the employee is ordinarily UK resident
There are, of course, many more areas to look at in detail, and the tax world is likely to be chewing over the implications until the last minute – some problems may not even become apparent until the tax return season for the 2008/09 year begins in earnest. We will be covering the topics in bitesize chunks over that time for the non-specialist with one or two non-domiciled clients.