The UK government is due to issue today
its statutory definition of tax residence and reform of rules on non-domiciled
residents in the UK, a measure which has been welcomed by the wealth management
industry for ending uncertainty.

In finance minister George Osborne’s
annual budget statement in March, he said he intended to consult on the case
for such a test. He increased the existing £30,000 ($48,400)
annual charge to £50,000 for non-doms who have been UK resident for
twelve or more years and who want to retain access to the remittance basis of
taxation. 

The £30,000 (around $48,360) charge will be retained for those who
have been resident for at least seven years but less than twelve years.

Uncertainty about what is meant as
residence for tax purposes is one of the reasons, some industry figures have
warned, that the UK has become a less attractive place for wealthy individuals
to live and work in.

Tax experts have identified wealthy
Indians as one of the principal groups of high net worth immigrants that could
shun the UK should the uncertainty continue. 



Some of the UK’s wealthiest residents are
Indian entrepreneurs, including steel tycoon Lakshmi Mittal, with a fortune of
£17.5 billion, and mining billionaire Anir Agarwal with a net worth of £3.8
billion. 

Additionally, Osborne said he will scrap
the tax charge when non-domiciled individuals remit foreign income or capital
gains to the UK for the “purpose of commercial investment in UK businesses”.

The moves were welcomed by the Society of
Trust & Estate Practitioners, which said that residency and nom-domicile
“are widely considered too complex, leaving existing clients unsure of how the
UK tax regime will operate”.

“A statutory residence test is capable of
being a simple and objective test and is widely used by other countries. For
non-doms we expect proposals to simplify the way they are taxed on commercial
investment into the UK.  These changes will give clients much needed
certainty and improve our international competitiveness,” said Wendy Walton, chairman
of STEP’s technical committee.

The UK Treasury confirmed the department
will issue a statement shortly but declined to elaborate on details when
questioned by this publication.