Long-Term Residents – Rebasing Print
This is probably the most beneficial measure, and allows a non-domicile who has paid the Remittance Basis charge before 6 April 2017, and will be treated as deemed domiciled in the UK under the new 15 out of 20 year rule on 6 April 2017 to rebase all overseas assets owned personally to their market value on 5 April 2017.
If deemed domicile occurs at a date after 6 April 2017, then rebasing will not be available to that individual.
This means that any future CGT liability will only be payable on the increase in market value of the asset from 6 April 2017 up to the date of disposal.
Rebasing will only be available in respect of assets held personally, and not those held within trusts or within companies. Furthermore rebasing does not extend to gains chargeable to income tax such as offshore funds which do not have reporting status in the UK.
The asset must have been situated outside the UK by 16 March 2016, and remain outside the UK until after 5 April 2017. This is most likely to affect chattels such as artwork which can be transported from territory to territory.
It was originally announced that rebasing would only be available in respect of overseas assets which were owned by the non-domicile prior to 8 July 2015. This restriction has been withdrawn, and rebasing will now be available on all overseas assets acquired before 6 April 2017.
Rebasing is withdrawn if the non-domicile acquires a domicile of choice of the UK prior to the disposal of the asset.
Where rebasing applies, the gains accruing in respect of the period before 6 April 2017 can be remitted to the UK tax-free as clean capital. However tax-free remittance does not extend to the funds used to purchase the asset where the purchase was made using overseas income or gains. In these circumstances if the entire proceeds are remitted to the UK, then a remittance of the funds used for the purchase is likely to give rise to a UK tax liability.
Rebasing will apply on an asset-by-asset basis, so if the historical cost is greater than the value in April 2017, the individual will be able to use the historical cost.