Planning for becoming deemed domiciled under the 15-year rule
Planning for becoming deemed domiciled under the 15-year rule

The following Private Client guidance note provides comprehensive and up to date legal information covering:

  • Planning for becoming deemed domiciled under the 15-year rule
  • Does the individual still have an actual non-UK domicile?
  • Tainting
  • Tainting—loans
  • Tainting and settlement powers
  • Rebasing to 6 April 2017
  • Cleansing of mixed funds
  • Key points

Finance (No 2) Act 2017 (F(No 2)A 2017) introduced several tax reforms in relation to foreign domiciliaries, including major changes to the regime that applies to offshore trusts. These changes include the introduction of the concept of a ‘protected settlement’, and the related concept of ‘tainting’. This Practice Note sets out the key points of the new regime as they relate to deemed domiciled settlors of offshore trusts and their trustees.

Does the individual still have an actual non-UK domicile?

Where an individual becomes deemed UK domiciled under the 15-year rule, it can nonetheless be advantageous to retain an actual foreign domicile.

Individual is settlor of a trust which enjoys the trust protections

Acquisition of an actual UK domicile causes the income tax and capital gains tax (CGT) protections to be lost.

Individual is beneficiary of a trust created before 6 April 2008

The CGT transitional provisions mitigating the effect of the 2008 changes on section 87 of the Taxation of Chargeable Gains Act 1992 (TCGA 1992) capital payments regime operate only so long as the recipient is non-UK domiciled. Actual domicile remains the sole determinant of eligibility for these reliefs. They can apply also to offshore income gains.

Rebasing to 6 April 2017

Rebasing remains available only so long as the individual remains non-UK domiciled.

See Practice Note: Domicile for a discussion of