After a period of uncertainty, the non-dom proposals that were set aside when the general election was called, have reappeared in the Finance (No 2) Bill issued on 13 July 2017. The proposals are again to be introduced with effect from 6 April 2017, despite the new Bill not becoming law until the autumn after the summer recess. This news will be a relief to those non-doms who took actions in advance of 6 April 2017 in anticipation of the changes, including those who:

  • left the country to avoid becoming deemed domiciled
  • wound up offshore trusts
  • unwrapped UK residential property
  • wish to take advantage of the cleansing provisions, or
  • wish to take advantage of the capital gains tax rebasing provisions

The grace period for cleansing offshore accounts is unchanged and all actions must be taken by 5 April 2019. In addition, loans provided to trusts by settlors who are deemed domiciled under the new rules, need to be reviewed by 5 April 2018 to avoid any loss of the trust protections going forward. Taking into account the delay in legislating the provisions, the period in which non-doms may arrange their affairs has been substantially shortened, so there may yet be potential for the deadlines to be extended as the Bill passes through Parliament. In any case, non-doms should continue to ‘sit-tight’ until the new legislation is enacted on receiving Royal Assent just in case there are any changes forced by the increased number of opposition MPs than existed before the general election.

It is recommended that non-doms review how the proposed changes are likely to affect them if they have not undertaken that exercise already. Non-doms who are yet to become deemed domiciled and who are not regarded as formerly domiciled residents under the new rules, still have time to set up offshore excluded property trusts and this may well provide a tax-efficient solution for non-doms who would otherwise need to pay the remittance basis charge in respect of their unremitted foreign income or gains. In all cases, the tax implications of other relevant tax jurisdictions would need to be considered before proceeding with UK tax planning and we can assist in providing contact details of advisers in other locations.

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