After the extraordinary results of the General Election earlier in the year and the publication of not one but two Finance Bills thereafter, the legislation affecting the taxation of non-UK domiciled individuals came into effect. Although there were calls for these rules to be delayed, the publication of the second Finance Bill confirmed that the Government’s project to reform the tax rules for non-UK domiciled individuals ("non-doms") were implemented on 6th April 2017.
The brief summary below summarises these changes:
- 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.
There have been some technical changes made and a welcome clarification around the ability to un-mix pre 6 April 2008 funds, as well as confirmation that the IHT charges in relation to loans provided for the purchase of residential property, or guarantees given, will be limited to the value of the loan.A number of earlier proposals which did not make the March and ‘Summer’ Finance Bills, such as anti-conduit rules involving offshore trusts, have re-appeared with some adjustments to be enacted in ‘Winter’ Finance Bill 2017-2018 with a view to introducing them from 6 April 2018. While this should ultimately provide more clarity, unfortunately, it adds a further layer of complexity for the 2017/18 tax year as trustees and their beneficiaries will now need to take into account two sets of rules when deciding whether and when to make a distribution or take benefits from an offshore trust.Whilst these announcements represent mixed news, particularly the retrospective nature of the changes, it does finally allow taxpayers to proceed in earnest in readiness for the un-mixing of their accounts and for those who qualify for the rebasing of foreign assets, calculate the tax consequences of any disposals. However, they are still advised to await final legislation and HMRC guidance as to how the cleansing rules will operate in practice before going ahead with making actual transfers from a mixed fund.he Government’s project to reform the tax rules for non-UK domiciled individuals ("non-doms") were implemented on 6th April 2017.Mirandus Accountants supporting local businesses in the City of London and Greater London area, providing accounting and tax services to SMEs and OMB clients and access and training on QuickBooks.Why not give us a call to see if we can help you complete your SA this year and help you be tax efficient.