In the aftermath of the UK’s snap general election on 8 June 2017, the proposed changes to the UK’s non-domicile tax regime (the “Proposed Rules”), which were due to come into force on 6 April 2017, were dropped from the Finance Bill 2017 (now “Finance Act 2017”) to ease the passage of the legislation through Parliament prior to the election.
However, in an announcement made on 13 July 2017, the government has confirmed its intention that the Proposed Rules will be legislated for after the summer recess in the new Parliament, and that the changes are to have effect from 6 April 2017, as originally planned.
Taxpayers should therefore assume that the following changes will indeed have effect from the start of the 2017/2018 tax year:
- 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 (currently, this is 17 out of 20 years);
- treating UK-born individuals who had acquired a domicile of choice outside the UK as being UK domiciled on taking up UK residence again;
- 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 for capital gains purposes; and
- the facility for cleansing of “mixed funds”.