The Government has finally confirmed that the non-domicile reforms, which were unexpectedly withdrawn from the Finance Bill 2017 prior to the General Election, will be re-introduced and have effect from 6 April 2017. A second Finance Bill 2017 will be published after the summer recess and the previously withdrawn legislation will be included in largely unchanged form.
As a reminder, the headline changes to the non-domicile rules are:
- Non-domiciled individuals who have been resident in the UK for 15 out of the previous 20 tax years as at 5 April 2017 will be ‘deemed domiciled’ for all personal taxation purposes.
- Individuals born in the UK with a UK domicile of origin, who established a non-UK domicile of choice, will not be able to benefit from the non-domicile taxation regime if they are a UK resident and any overseas structures will not be afforded protection.
- New rules will be introduced providing certain protections to the taxation of offshore trusts established by non-domiciled individuals.
- Overseas structures owning UK residential property will come within the scope of UK inheritance tax.
In addition to the above, the 5 April 2017 rebasing and the opportunity to ‘cleanse’ mixed accounts will also take effect, as previously announced.
Following months of uncertainty after the original legislation was withdrawn, it is a relief to finally have certainty on the position. In addition, this confirmation finally provides comfort to those non-domiciled individuals and trustees of offshore trusts who took restructuring action before 6 April 2017.
Finally, those non-domiciled individuals who had paused to take any action in relation to the 5 April 2017 rebasing and ‘cleansing’ provisions can now progress their plans with certainty.