20.08.2014. HMRC changes tax on loans secured by non-domiciled persons (“non doms”) using foreign income and gains

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HMRC has announced that it is to withdraw its concessional treatment of commercial loan arrangements secured using unremitted foreign income or gains as collateral for a loan enjoyed in the UK.

Effective August 6, 2014, money brought to or used in the UK under a loan facility secured by foreign income or gains will be treated as a taxable remittance of that amount of foreign income or gains. If the loan is serviced or repaid from different foreign income or gains, the repayments of capital and interest will constitute remittances in the normal way.

The taxpayer must give a written undertaking by December 31, 2015, that the foreign income or gains security either has been, or will be, replaced by non-foreign income or gains security before April 5, 2016, or the loan or part of the loan that was remitted to the UK either has been, or will be, repaid before that date.

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