Section 52: Exemption for Certain Non-Domiciled Persons
Summary
1.Section 52 provides for an exemption from liability to income tax for certain individuals.
Details of the Section
2.Paragraph (1) inserts a new Chapter 1A of Part 14 into the Income Tax Act 2007 (ITA).
3.New section 828A of ITA defines the individuals to whom the tax exemption applies as those who are resident but not domiciled in the UK in a tax year, who do not choose to use the remittance basis and who meet conditions A to F in new section 828B.
4.Section 828B sets out conditions which individuals must meet in order to qualify for the tax exemption.
5.New section 828C provides the mechanism for providing the income tax exemption.
6.New section 828D defines various terms for the purpose of for new Chapter 1A.
Background Note
7.Individuals who are resident but not ordinarily resident or not domiciled in the UK can use the remittance basis of taxation whereby they are required to pay UK tax on their offshore income and gains only to the extent to which they are brought - or remitted - into the UK.
8.Section 25 of and Schedule 7 to the Finance Act 2008 introduced significant changes to the remittance basis, which came into effect from the start of the 2008-2009 tax year for that tax year and all subsequent tax years.
9.During the passage of Finance Bill 2008 the Government gave an undertaking that HM Treasury and HM Revenue and Customs officials would consult with external stakeholders following Royal Assent to review the legislation to ensure it operated as intended and to identify areas where it could be clarified or improved. The majority of the amendments introduced in Finance Act 2009 arise from this consultation.
10.The Act also clarifies the definition of a relevant person and provides a statutory rule for determining the value of a remittance where property forming part of a larger set is remitted to the UK. Both changes are intended to prevent potential abuse of the remittance basis rules.
11.This Section introduces a new income tax exemption for low-income employees working in the UK who meet certain conditions. Such individuals will typically be migrant workers employed in seasonal work in the agricultural or service sectors in UK and in other countries in the same tax year and whose overseas income is subject to tax where it is earned. Previously they were required to file a Self Assessment tax return, even in situations where there was no, or very little, tax to pay. This exemption removes that requirement in most cases.
