Significant news for Non Doms! Government excludes a number of proposals from the Finance Bill 2017
The Government has now dropped many of the proposals discussed in the last budget. It is possible that these provisions may be reintroduced after the election, but this will of course depend on who wins.
Of significant interest will be the proposed changes to inheritance tax on residential property and non doms. A summary of the key provisions that have been excluded are:
- The changes to non-doms who were to be treated as deemed domiciled for all tax purposes from 6 April 2017
- Rebasing foreign assets by such new deemed doms to their market value on that date
- The cleansing of mixed bank accounts to enable non-doms to bring clean capital to the UK
- Inheritance Tax on all UK residential property even where held indirectly by a non-dom through an offshore company or trust.
- Treatment of loans to buy UK property as UK situs for inheritance tax
- The reduction in the tax free dividend band sometimes utilised by owner-managed businesses as part of their remuneration packages
- Changes to NIC on termination payments
Non doms may still be able to claim the remittance basis of taxation for 2017/18 although this will be confirmed after the election. The washing of offshore bank accounts should be halted. If you have sold assets outside the UK to claim the rebasing relief, any proceeds should be retained outside the UK. Do not make any remittances to the UK until the period of uncertainty has passed.
In addition to the above, it’s worth noting that for LTDs, the proposed changes to loss relief and interest relief have also been excluded.