Increases in the Remittance Basis User Charge

Chancellor George Osborne also wants to ensure a fair contribution from individuals.

As part of this objective he has targeted people who are resident but not domiciled in the UK and who choose to be taxed on the remittance basis.

The Remittance Basis User (RBU) Charge was introduced in April 2008 when individuals not domiciled in the UK but resident for seven out of the previous nine tax years were required to pay a 30000 annual charge to be taxed on the remittance basis.

The charge was extended in April 2012 at which point a 50000 RBU charge was introduced for individuals not domiciled in the UK but resident for 12 out of the previous 14 tax years.

In his Autumn Statement George Osborne increased the 50000 RBU charge to 60000 and introduced a further charge of 90000 for individuals not domiciled in the UK but resident for 17 out of the previous 20 tax years which will coincide with when the individual would become UK deemed-domiciled for inheritance tax purposes.

The lower 30000 RBU charge will remain as is unchanged since 2008.

Furthermore the Government is also going to consult on making the election to pay the RBU charge apply for a minimum of three years. At present individuals can elect to pay the RBU charge on an annual basis; therefore they are able to arrange their affairs so that it is tax-efficient to pay the charge occasionally. If this measure is introduced an individual who makes large foreign gains in a particular tax year will need to suffer the RBU charge for a minimum of three years.

One assumes that the Government's aim is to bring more individuals who are resident but non-UK domiciled under the arising basis of taxation. However these extensions to the RBU charge may also have the effect of encouraging those non-UK domiciled individuals to actually leave the UK.