On 13 July 2017 the UK Government announced that the tax changes affecting non-UK domiciliaries, which were dropped from the pre-election Finance Bill 2017 in March this year, will be re-introduced in the autumn Finance Bill (No 2) 2017 and will have retrospective effect from 6 April 2017.
The announcement confirms that the draft 2017 Finance Bill "will be introduced as soon as possible after the summer recess".
On 13 July the UK Government also published the relevant clauses in draft, which include some minor technical amendments to the original draft legislation. Additional information may be forthcoming when the draft 2017 Finance Bill is published this autumn.
In the meantime, the key points to note for our non-UK domiciled clients remain as follows:
- Long term UK resident clients who have been resident in the UK for 15 out of the previous 20 tax years will become UK Deemed Domiciled from their 16th year of tax residency;
- Individuals who were born in the UK with a UK domicile of Origin will become UK Deemed Domiciled in the UK once they return to the UK. For income tax and capital gains tax, this will be immediate. For Inheritance Tax there will effectively be a 1 year grace period;
- For non-UK domiciled individuals, the shares in an offshore company will no longer be excluded property for UK Inheritance Tax purposes, to the extent that the value of those shares is derived from residential property in the UK, and therefore will form part of their UK estate on death. In addition, an offshore trust settled by a non-UK domiciled individual will also be subject to UK Inheritance Tax on UK residential properties held via an offshore company.
It is possible that there may be further changes due to the current political uncertainty. We will continue to update you as soon as additional noteworthy information becomes available on the subject.
We will be contacting any clients who are affected by these measures in due course but if you would like to discuss any of these points, or your or your client's tax position in general, please contact your usual SMP adviser or one of the contacts listed below.
Tel: +44 1624 683262
Tel: +44 1624 683254
Tel: +44 1624 682267