Non UK domiciliaries with income and gains retained offshore
We’ve seen in other notes how non domiciliaries are in a privileged position when it comes to using offshore companies and trusts.
In general they will find it easier to use offshore companies and trusts as It’s often easier for them to establish management and control of the company from overseas. In particular, in practical terms having overseas family and making frequent overseas visits can make it easier to show foreign directors exercising genuine control from overseas
Where non domiciliaries claim the remittance basis this will also apply to income and gains of an offshore company for the purposes of both the anti avoidance rules and actual dividends extracted from the offshore company.
This means that:
- The anti avoidance rules that can tax UK residents on income of an offshore company won’t apply providing the company income is retained abroad
- The anti avoidance rules that can tax UK residents on capital gains on an offshore company won’t apply providing the assets sold are foreign assets and the proceeds are retained overseas
- Any dividends extracted from the offshore company won’t be subject to UK income tax providing the cash is retained overseas
The crucial point for this is that the remittance basis is being claimed by the non domiciliaries and that they retain the income / proceeds overseas.
- Non domiciliaries who are not also deemed UK domiciliaries for UK Inheritance tax purposes would be exempt from UK inheritance tax on the value of the shares in the offshore company.
This means that offshore companies can be attractive holding companies for non dom claiming the remittance basis.