If you are a non-dom or are about to become non-UK domiciled, it would be worth reviewing your UK estate and tax planning.
The government has confirmed that a second Finance Bill 2017 dealing with the non-domicile taxation reforms will be introduced after the parliamentary recess to implement the policies that were withdrawn before the general election. The policies will have retrospective effect from 6 April 2017. The announcement is a welcome end to the uncertainty that non-doms have faced for the past few months.
The key provisions are:
Taxation of offshore trusts
UK inheritance tax (“IHT”) will be extended to UK residential properties that are held by non-UK domiciled individuals through overseas vehicles. It is expected that this will prompt many more non-doms to consider de-enveloping properties from their corporate structures.
15 year rule
The 15-year rule is effectively just a shortening of the 17-year rule that applied before 6 April 2017. A non-UK domiciled individual will be treated as UK domiciled for IHT purposes where they have been UK resident for at least 15 of the last 20 tax years.
Formerly domiciled residents rule
A stricter deemed domicile rule applies to non-UK domiciled individuals who were born in the UK and had a UK domicile of origin at birth. Individuals in this category (formerly domiciled individuals) will acquire a deemed UK domicile for IHT purposes from the start of their second tax year of continuous UK residence.
In light of this, if you are a non-dom or are about to become non-UK domiciled, it would be worth reviewing your UK estate and tax planning.