Big changes for non-doms
In July 2015, the then Chancellor, George Osborne, presented a special Summer Budget, his first without coalition partners.
However, one of the important measures announced at that time was the abolition of non-domicile status. The government first declared its intention to legislate such that, from April 2017, any person who has been resident in the UK for more than 15 of the previous 20 years will be deemed to be domiciled in the UK for tax purposes.
Additionally, from April 2017, individuals who are born in the UK, to UK domiciled parents, will no longer be able to claim non-domiciled status whilst they are resident in the UK. This measure is intended to prevent those with the most significant links to the UK from returning here from abroad and claiming non-dom status. This will affect a lot of non-doms but the government has been clear that this measure will be implemented as originally set-out.
There have also been many calls to change or cancel these plans, especially following the Brexit vote. However, the government has stood firm and these measures will be implemented. It is also intended to ensure that from April 2017, Inheritance Tax will be chargeable on UK residential properties owned by non-doms through overseas structures. Currently some non-doms are not liable to pay Inheritance Tax on UK residential property which is held indirectly through overseas vehicles such as companies and trusts.
HM Treasury has now published a further document which responds to the earlier consultations and sets out the final package of reforms. These reforms include the introduction of a number of transitional measures to assist non-doms to adjust to the new rules. A package of arrangements will be introduced to help non-doms adjust to the new regime, in respect of the rebasing of foreign assets, cleansing of mixed funds and provisions for offshore trusts. There will also be changes to make the Business Investment Relief scheme more usable. Some of these changes will be legislated for in Finance Act 2017 which was published earlier this week. The Bill will be effective as of 6 April 2017. There remain some changes where we await the publication of draft legislation.
If you are concerned by any of the changes outlined above, please contact us for further information.