Sweeping changes being introduced for non-domiciles (non-doms) will take effect from 6 April 2017. These changes are significant and will affect all non-doms. Our recommendation is that non-doms review their particular circumstances so they are aware of how they will be impacted by the new rules, and consider any steps they may wish to take before 6 April 2017. The window of opportunity for taking action will soon be closed.

Many non-doms have offshore holding structures for assets — such as cash, company shares and real estate — which will need to be actively reviewed in light of the fundamental changes being introduced from 6 April 2017. The other reason why a proactive approach should be taken is that there are no valuable restructuring reliefs under the current draft legislation, so the earlier potential issues are tackled, the better.

The purpose of this note is not to provide a detailed explanation of the new rules, but to highlight the importance of reviewing and considering matters before 6 April 2017. A brief summary of the changes follows.


UK residential properties held through offshore structures (companies, partnerships or trusts) have, until now, been shielded from UK inheritance tax (IHT).

The new legislation removes this protection for all events from 6 April 2017, whether it be the death of the offshore shareholder or, on exit of assets from offshore trusts.

This means the value of property directly or indirectly attributable to a “UK residential property interest” will be subject to IHT.


A foreign domiciled individual who has lived in the UK for 15 tax years will now be subject to the arising basis of taxation on worldwide income and gains in the same way as UK domiciliaries.

More stringent rules apply to individuals born in the UK, with a UK domicile of origin, who have left the UK and obtained a domicile of choice elsewhere. They will become subject to the arising basis on their return to the UK.


The new legislation provides that non-UK resident trusts established by non-dom settlors will be subject to special tax rules once the settlor becomes UK deemed domiciled. These new rules provide even further complexity to an already extremely technically complex area and require detailed consideration.

Protected status will be available for non-UK resident trusts settled by individuals, before they become deemed domiciled in the UK, provided that the settlor makes no direct or indirect addition to the trust after becoming deemed domiciled in the UK, and there are complex rules relating to distributions from the trusts.


The remittance basis rules governing mixed offshore funds dictate that taxable income and gains of a tax year are treated as remitted, before non-taxable “clean” capital. Current rules also prevent the separation of these components into different offshore accounts.

The new legislation allows a non-domiciled individual who has been taxed on the remittance basis to transfer amounts between overseas mixed-funds bank accounts, without being subject to the offshore transfer rules. This will offer an opportunity for the different components within the accounts to be separated, thereby allowing clean capital to be remitted to the UK in priority to the income and gains, provided the specific procedures are followed.


The new legislation provides that the market value of an asset at 5 April 2017 can be used as the acquisition value for capital gains tax (CGT) purposes when computing the gain or loss on its disposal. These rules will apply to assets situated outside the UK between 16 March 2016 and 5 April 2017. These rules will apply to any individual who becomes deemed domiciled from April 2017, other than one who is born in the UK with a UK domicile of origin.

This means, provided that the necessary criteria are met, on a future sale of such a qualifying asset, only gains accruing from 6 April 2017 onward may then be taxable (on the arising basis). Rebasing will not apply on a mandatory basis (taxpayers will be able to choose whether they wish for it to apply) and so will need to be considered on an asset-by-asset basis.

The rule applies to individuals, rather than trusts, so a review and restructure may be necessary to benefit from this rule.


All non-doms should actively review their particular circumstances before the introduction of the new rules from 6 April 2017.

Non-doms who are not yet deemed domiciled for UK IHT purposes should consider creating an excluded property trust before deemed domiciled status is acquired. Furthermore, non-doms who have mixed funds and will become deemed domiciled from April 2017 should start to collate records for the mixed-fund accounts, in order to utilise the window for tidying up these accounts.

Trustees of non-UK resident trusts should be considering and reviewing any action/steps they may wish to take before April 2017. They could consider accelerating offshore distributions to UK beneficiaries who will become deemed domiciled and will be taxed on the arising basis from April 2017.

The changes are complex and the detailed specific provisions are beyond the scope of this briefing note. The purpose of this note is to draw attention to the need for urgent, proactive action, to review not only any personal holdings but also any structures. All structures for UK residents or holding UK assets should be audited and considered prior to 6 April 2017.