Finance Act 2017: Postponement of Proposed Changes to the UK’s Taxation of Non-Domiciliary Rules

Andre Anthony, Tax Associate, CMS

The proposed changes to the UK’s taxation of non-domiciliary rules, which were due to come into force on 6 April 2017, were dropped in their entirety from Finance Bill 2017 (now Finance Act 2017) to enable passage of the legislation through Parliament ahead of the snap General Election on 8 June 2017.

This move came as a complete surprise and could hold adverse consequences for individuals who incurred substantial amounts of time and money to organise their affairs prior to the introduction of the proposed new rules, particularly if these rules are not enacted in their present form after the election.

While we would expect that these proposed changes will be brought forward through a further Finance Bill shortly after the election (and potentially backdated to 6 April 2017), it is entirely possible that the changes might be postponed to a later date such as 6 April 2018. The following proposed changes have not been enacted in Finance Act 2017:

  • deeming an individual to be domiciled in the UK for income tax, capital gains tax and inheritance tax purposes after 15 out of 20 years of UK residence;
  • treating UK born individuals who had acquired a domicile of choice outside the UK as being UK domiciled on taking up UK residence again;
  • changing the taxation of offshore trusts regime;
  • introducing inheritance tax charges on UK residential property held through offshore structures by non-UK domiciled individuals;
  • rebasing of assets held on 6 April 2017 for individuals becoming deemed UK domiciled on 6 April 2017; and
  • cleansing of mixed funds.

Any postponement of these proposed changes could present a window of opportunity to undertake further planning.

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