Non-UK Domiciles: HMRC Removes Loan Concession
HMRC has removed a concession which permitted non-doms to enjoy a loan in the UK where unremitted income or gains are used as collateral for the loan. [partner-katharine-arthur]
The concession applied where offshore income or gains were used to service a commercial loan, in order to stop there being a taxable remittance of double the loan amount.
From 4 August 2014, money brought to or used in the UK under a loan facility secured by foreign income or gains will be treated as a taxable remittance. If the loan is serviced or repaid from different offshore income or gains, the repayments of capital an interest will also be taxed as remittances in the usual way.
Taxpayers with existing loans must make a written undertaking to HMRC by 31 December 2015 that the collateral will be replaced by non-offshore income or gains by 5 April 2016, or that the loan remitted to the UK will be repaid by the same date.
Non-doms with loans secured on offshore assets should review their arrangements. Contact Katharine Arthur for further details and assistance.