I am sure that, if one listened very carefully, a collective sigh of relief could be heard once George had sat down on Weds afternoon (and all the follow up docs had been fully scoured!) as the 2016 Budget was relatively quiet in the area of the taxation of non-doms.
Of course, we did see confirmation that the main changes announced in the Summer Budget 2015 will be introduced in the Finance Bill 2017 and become effective from April 2017. These measures included the deemed domicile status for long term resident individuals and IHT for UK residential properties held in offshore structures
‘Aaah, but doesn’t the title of this update refer to their being some good news?’ I hear you say.
Well, the good news is that long term residents who becomes deemed dom from April 2017 will be entitled to a ‘re-basing’ of their assets for UK tax purposes. As such, only the increase in value in those assets accruing after April 2017 will be subject to tax on the arising basis when those assets are subsequently sold.
This makes the proposed changes slightly more palatable where a long-term residents has a large portfolio of foreign assets which standing at a gain.
Individuals owning liquid financial investments (such as stocks and bonds) may have been able to achieve a similar effect by disposing of those assets in early 2017, to trigger foreign gains before the new rules come into effect, and then repurchasing identical assets after April 2017.
One would anticipate that any pre-April 2017 part of a gain will remain to be taxed the remittance basis. But that’s just our opinion only.
If you, or your clients, are non-UK domiciled and need advice in relation to these measures then please get in touch.