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03/12

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

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:

Old Mutual Wealth

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

It has an adviser and customer offering spanning:

  • Financial advice delivered by the Intrinsic network in the UK and AAM Advisory in Singapore
  • Platform based wealth management and protection products delivered by Old Mutual Wealth in the UK & Italy* and Old Mutual International globally
  • Asset management solutions delivered by Old Mutual Global Investors
  • Discretionary investment management delivered by Quilter Cheviot.

Old Mutual Wealth oversees £119 billion in customer investments (as at 30 September 2016).

Old Mutual Wealth is part of Old Mutual plc a FTSE 100 group that provides life assurance, asset management, banking and general insurance. Old Mutual is trusted by more than 19.4 million customers across the world and has a total of £342.7 billion assets under management (as at 30 June 2016).

*Old Mutual Wealth announced the sale of Old Mutual Wealth Italy to Ergo Italia on 9 August 2016. The transaction is pending completion.

This press release is for journalists only and should not be relied upon by financial advisers or customers. Investments may fall or rise in value and investors may not get back what they put in.