Non-doms: tax changes are clear

Peter Goodman profile image

Peter Goodman, Partner

Peter joined Wilkins Kennedy in 1986 and was made a Partner of the firm the following year.

Feb. 27, 2017


The Government recently announced some changes relating to the way non-domiciled individuals are taxed. Following initial consultation, responses were published in draft legislation on 5 December 2016, but there was still some uncertainty relating to the rebasing of individuals who were resident non-domiciled. A further update has now provided some clarification.

The changes announced in the initial draft legislation included:

  • New deemed UK domicile 15/20 year rule
  • Rebasing of offshore assets held as at 16 March 2016, or if later, the date of acquisition, for individuals who have paid at least one remittance basis levy in the years 2008/09 to 2016/17, and become deemed domiciled on 6 April 2017 ( in line with the 15/20 year rule)
  • Proposals to charge IHT on UK residential property held through an offshore entity
  • Reforms for offshore trusts

However, following the release of this draft legislation on 5 December, it was originally announced that non reporting offshore funds would not qualify for rebasing for individuals who become deemed domiciled on 6 April 2017.

Following publication of further draft legislation on 26 January 2017, HMRC has now changed its policy regarding such funds and consequently such offshore funds will now qualify for the rebasing relief. Accordingly, providing all other conditions for rebasing are met, the gains chargeable to income can be rebased to 5 April 2017.

The change tallies with the Offshore Funds (Tax) Regulations 2009 which provides guidance for calculating an offshore income gain and although minor changes may be introduced between now and the implementation of the Finance Bill 2017, the overall scheme of reforms relating to the taxation of non-domiciled individuals is now settled.

The changes will come into effect from 6 April 2017 so if this applies to you, then we recommend that you review your affairs immediately to consider whether any pre 6 April 2017 restructuring is appropriate. Providing all other conditions are met, non-reporting offshore funds chargeable to income tax can be rebased to 5 April 2017.

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