HMRC have withdrawn an important concession regarding the use of loans in the UK which are backed by non-UK assets.
Previously, HMRC published practice allowed non-domiciled taxpayers to use non-UK income/gains as collateral for loans which were used in the UK, without taxing the income/gains backing the loan. This only applied where the finance was raised "in the majority of commercial situations", but could be a useful relief if used correctly.
Non-doms who have pledged untaxed non-UK income/gains in support of borrowings which they have gone on to use in the UK will therefore need to review their options in this regard. Thankfully, there is a grace period up to 31 December 2015 to unwind or restructure loans before any charges apply, but there is no outright "grandfathering" of existing loans. The changes therefore have retroactive effect, which does come as something of a surprise.
Equally, any future borrowings which may be used in the UK will need to be carefully structured, as the withdrawal of the concession gives rise to potential double tax charges.
We can help to review your options regarding existing borrowings, and help those who do wish to borrow for use in the UK to do so tax-efficiently where possible. Please contact us to speak to an adviser about the changes and how these may affect you.