Non-domiciles targeted in Autumn Statement, offshore bond an attractive solution
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Non-domiciles targeted in Autumn Statement, offshore bond an attractive solution

03/12/2014

In the Chancellor’s Autumn Statement non-domiciled individuals living in the UK have been targeted. The amount non-domiciles pay as a ‘remittance basis charge’ will increase, making it more expensive for them to defer paying UK tax on their overseas income or gains.

The amount of the remittance basis charge for non-domiciles has changed as follows:

• If resident in the UK for 7 out of 9 years, the charge will remain at £30,000
• If resident in the UK for 12 out of the last 14 years, the charge increases from £50,000 to £60,000
• There will be a new charge of £90,000 introduced for people resident for 17 out of last 20 years

Non domiciles have two options when it comes to paying tax on overseas income and gains. They can pay UK tax as and when the liability arises, or they can defer the tax, known as a ‘remittance basis’. If they choose the remittance basis they have to pay a ‘remittance basis charge’.

However, rather than paying the annual remittance charge, if the non-domiciled individual only holds investments, then an alternative solution to this higher charge could be to wrap the investments inside an offshore bond.

Taking this action could save thousands in remittance charge and, for those who have been in the UK for long time, could save them £90,000 a year. The offshore bond essentially defers any income tax and capital gains tax liability until the bond is encashed, which is why there is no tax to declare on an annual basis.

The benefit of using an offshore bond rather than paying the remittance charge is compounded by the fact that if the individual pays a remittance charge they will also lose their capital gains tax allowance and personal allowance.

Rachael Griffin, head of technical marketing at Old Mutual Wealth, comments:

“By significantly raising the amount of remittance charge non-domiciled UK residents pay, the Chancellor is forcing them to look for alternatives. An effective solution for those who hold investments overseas is to restructure these assets inside an offshore bond. This approach can be extremely beneficial providing the individual doesn’t hold other overseas assets outside of the offshore bond.”

For more information contact:

Sophie Lenton Old Mutual Wealth 023 8091 677007834 499 558

Notes to editors:

About Quilter plc:

Quilter plc is a leading wealth management business in the UK and internationally, helping to create prosperity for the generations of today and tomorrow.

Quilter plc oversees £116.5 billion in customer investments (as at 30 June 2018).

It has an adviser and customer offering spanning: financial advice; investment platforms; multi-asset investment solutions and discretionary fund management.

The business is comprised of two segments: Wealth Platforms and Advice and Wealth Management.

Wealth Platforms includes the Old Mutual Wealth UK Platform; Old Mutual International, including AAM Advisory in Singapore; and the Old Mutual Wealth Heritage life assurance business.

Advice and Wealth Management encompasses the financial planning network, Intrinsic; Old Mutual Wealth Private Client Advisers; discretionary fund management business, Quilter Cheviot; and the Multi-asset investment solutions business.

The Quilter plc businesses are being re-branded to Quilter over a period of approximately two years:

• The Multi-asset business is now Quilter Investors

• Intrinsic to Quilter Financial Planning

• Private Client Advisers to Quilter Private Client Advisers

• The UK Platform to Quilter Wealth Solutions

• The International business to Quilter International

• The Heritage life assurance business to Quilter Life Assurance

• Quilter Cheviot will retain its name

This press release is for journalists only and should not be relied upon by financial advisers or customers.

Please remember that past performance is not a guide to future performance. The value of investments and the income from them can go down as well as up and investors may not get back any of the amount originally invested. Exchange rate changes may cause the value of overseas investments to rise or fall.

This communication is issued by Quilter plc.  Registered office: Millennium Bridge House, 2 Lambeth Hill, London EC4V 4AJ, United Kingdom. Registered number: 6404270.  Registered in England.