In our article dated 1st May 2017 ‘Hold on Changes to UK Taxation of Res Non-Doms’, we noted that the proposed changes to the UK taxation of non-domiciliaries, which were to take effect from 6 April 2017, had recently been put on hold due to a shortage of Parliamentary time in advance of the upcoming General Election, with some uncertainty as to when or how they would be further implemented.
The UK government has now announced that the proposed changes to the taxation of non-domiciliaries will be re-introduced, and where it was previously unclear as to whether implementation would be through a further Finance Bill after the election (and backdated to 6 April 2017) or postponed to 6 April 2018, it has now been confirmed that the changes will be implemented with effect from 6 April 2017.
There remain concerns around the legislation remaining in draft form until approved by Parliament, and it is anticipated that we may not see the legislation in its final form until late October or early November 2017.
As we set out in our previous article, the main changes include:
- The new rule that would deem an individual to be domiciled in the UK for income tax, capital gains tax and inheritance tax after 15 out of 20 years of UK residence;
- The rule that would treat UK born domiciliaries who had acquired a domicile of choice outside the UK as being UK domiciled on taking up UK residence again;
- The changes to the taxation of offshore trusts, protection from income tax, capital gains tax and inheritance tax for trusts established before an individual acquires deemed domicile status unless those trusts are tainted by additions
- The introduction of inheritance tax charges on UK residential property held through offshore structures by non UK domiciliaries
- The rebasing of assets held on 6 April 2017 for individuals becoming deemed UK domiciled under the 15/20 rule on 6 April 2017;
- Cleansing of mixed funds (the ability for individuals to “un-mix” previously mixed funds of income and capital into their respective parts at any time up to 5 April 2019)
- Relaxation of business investment relief rules
Watch this space for further updates on the issue.
For more on the UK Res Non-Dom scheme, please click here:
September 2011: http://www.osiristrust.com/whatsnew/highnetworth.pdf
15 April 2016: http://ocs.world/uk-spring-budget-2016-update-for-res-non-doms/.