The Baltic Exchange will take part in high level consultations with UK Treasury officials in the wake of the Chancellor of the Exchequer’s recent announcement of changes to the non-domiciled resident tax regime. The proposed changes mean that UK residents will be deemed domiciled for income tax and capital gains tax purposes after 15 years of residence, and will pay tax on their worldwide income and gains. This rule will also apply to inheritance tax.
The current rules require non-domiciled residents to pay a Remittance Basis Charge (RBC) of between £30,000 and £90,000, depending on how long the individual has lived in Britain. Payment of the RBC means that the individual is not taxed on his or her worldwide income, but only on UK income or remittances to the UK.
The Baltic Exchange will be seeking a softening of the changes announced. The Exchange’s position is that the UK economy benefits hugely from the many foreign shipowners who reside in the UK, pay tax in the UK, but have also long enjoyed the benefits of non-domiciled status to ensure that their global businesses are not brought into the UK tax net.
Far from costing the UK economy significant lost tax revenues, international shipowners support a huge raft of professional maritime service providers including shipbrokers, financiers, insurers and lawyers. Over 10,000 jobs depend in the long term on the presence in London of a substantial shipping community. According to a 2015 report by Oxford Economics the professional maritime cluster centred around London paid £400m in taxes in 2013 and directly added £1.6bn to the British economy.
Should there not be a base of international shipowners to service, the Exchange fears that many of the providers will in the long-term be forced to relocate to wherever there clients are.