The government has now confirmed its intention that anticipated major reforms to the taxation of ‘non-doms’ will be effective from 6 April 2017. These reforms relate to non-UK domiciled individuals who have been long term UK residents, individuals who have previously been domiciled in the UK and the inheritance tax position of UK residential property held through certain structures. The changes were proposed in July 2015 and since then we have been working towards a 6 April 2017 implementation date. However the surprise announcement of the election earlier this year meant a withdrawal of these reforms with no certainty as to whether and when they would be introduced.
On 13 July, the government announced its intention that the reforms will come into force with effect from 6 April 2017 and that a second Finance Bill 2017 – including these changes - will be published after the summer Parliament break. However, given the environment of political uncertainty in the UK, nothing will be certain until the bill has actually passed through parliament.
As part of the 13 July announcement some additional draft legislation was released which has made certain changes and clarifications to the previous drafts. Our review of this draft legislation suggests that there are still significant parts of the legislation missing and a level of uncertainty still exists around these (for instance, proposed anti-avoidance rules for taxation of trust gains).
For clients who restructured in the run up to 6 April 2017, this announcement confirms that this was the right decision! Those who have not yet reviewed their position, or who are approaching 15 years of UK residence, should consider whether the opportunity remains to restructure.
If you require further information on anything covered in this briefing please contact Russell Cohen, Claire Randall or your usual contact at the firm on 020 3375 7000.
This publication is a general summary of the law. It should not replace legal advice tailored to your specific circumstances.
© Farrer & Co LLP, July 2017