Further detailed announcements in the 2016 Budget were conspicuous by their absence, leaving non-UK domiciled individuals unable to make plans for what are expected to be far-reaching changes. Many clients were left disappointed at the lack of any meaningful update, as were the many professional advisers who have spent considerable time responding to the government consultation paper. By drawing the government's attention to a number of potentially unintended consequences of the non-dom proposals, it is perhaps no surprise that several aspects of these may be sitting in the "too difficult" pile.
There were only three relevant announcements in the Budget:
- Earlier announcements that inheritance tax will be charged on UK residential properties held indirectly through offshore structures from April 2017 were confirmed. What was missing was the detail that clients and advisers are seeking.
- It was confirmed that the base cost of non-UK assets will be taken to be the market value of the asset in question on 6 April 2017 for those becoming deemed domiciled in April 2017. This is welcome news although it remains unclear whether the April 2017 market value will be the base cost even for non-doms who become deemed domiciled after 2017. Ideally the base cost would be the market value at the time the individual becomes deemed domiciled, whenever that may be.
- It was announced that transitional provisions will apply to those with offshore funds that are remitted to the UK. Again, no details were provided at this stage.
So the waiting game continues, with little over 12 months before the new rules come in.
We will be closely tracking the new legislation, accompanying government guidance and related announcements and will publish further editions of Countdown to 2017 over the coming months. In the meantime, if you have any questions about the proposals, or you would like us to analyse your particular circumstances and advise on possible tailored mitigation strategies, then please contact Andrew Goldstone or your usual Mishcon de Reya tax contact.