Changes for Non-UK Domiciliaries from April 2017
14 July 2017
It was announced on 13 July 2017 that the eagerly awaited Summer Finance Bill will not now be issued before Parliament breaks for recess but in fact that it will be published upon its return in September.
However, the Government has made a written statement to the effect that the Finance Bill will include all of the provisions for the taxation of non-domiciles which were dropped at short notice earlier this year, and that they will be introduced with retroactive effect from 6 April 2017.
Although some taxpayers will find this unhelpful and possibly unfair, at least it brings some certainty to the position which is to be welcomed.
As a brief summary, the changes due to be brought in are as follows:
- The introduction of the deemed domicile rule for all tax purposes for those who have lived in the UK for 15 of the last 20 tax years
- The ability to rebase foreign sited assets for capital gains tax purposes for those deemed domiciled individuals
- Specific measures for those born in the UK with a UK domicile of origin to treat them as UK domiciled
- The ability to cleanse mixed funds for all non-doms who have previously claimed the remittance basis of assessment
- Certain protections for offshore trusts as well as tainting provisions
- The introduction of ‘look through’ Inheritance Tax rules where UK residential property is held within a corporate, partnership or trust structure.
Updated draft legislation has now been published. A number of previous proposals which did not make the March Finance Bill have yet to re-appear such as anti-conduit provisions concerning offshore trusts and the expansion to the Business Investment Relief scheme. It is expected that they will be considered in more detail by the Government with potential introduction from 6 April 2018.
Whilst this represents mixed news, particularly the retrospective nature of the changes, it does finally allow taxpayers to proceed in earnest in terms of the un-mixing of their accounts and taking the opportunity to crystallise disposals for those who qualify for the rebasing of assets potentially allowing them to access clean sources of capital for remittance purposes. As always, the devil is in the detail and care will be required in taking any action along these lines but BDO is well placed to advise having followed these changes closely throughout.
BDO will be publishing a fuller analysis of the updated provisions in due course (as a download from this page) but if you have any queries at this stage please contact your normal BDO adviser.