with Alastair Byrne of JWP Creers

THOUSANDS of non-UK domiciliaries could face a steep hike in tax payments owing to HMRC without careful planning, ahead of reforms set to be introduced on April 6, 2017.

They will apply to non-domiciles who have been resident in the UK for 15 of the previous 20 tax years, and all those affected by the changes will need to review their personal and family’s financial positions and any offshore structures which will be affected by the reforms.

These reveal wide-ranging changes, including reforms to income tax and capital gains tax, mixed funds, and also reforms to the amount of inheritance tax due on UK residential property, particularly if the property is held via an offshore company.

The nature of financial, business and property assets of non-UK domiciliaries is complex, so taking advice during the time between now and when the reforms come into effect is strongly recommended or tax planning opportunities will certainly be missed.

The Government may also introduce more changes in the 2017 March Budget, so plan sooner rather than later.

The main features of the reforms to the taxation of non-UK domiciliaries are:

• Capital gains tax (CGT) – a rebasing to the April 6, 2017, value will apply to foreign assets held by an individual who becomes a long-term deemed domicile on that day. The relief is limited to taxpayers who have paid the remittance basis charge in any year before April 6, 2017, and to those assets that were foreign sited as at July 8, 2015.

• Inheritance tax (IHT) – the Government has confirmed the intention to prevent UK residential property held indirectly, ie through a company, from escaping inheritance tax, and the reforms specify that the value of any asset which represents an interest in a UK dwelling will not qualify as ‘excluded property’ from April 6, 2017, and so will fall within the charge to IHT.

• Offshore trust protection – the Government has abandoned the original proposal in relation to settlor-interested trusts established by non-domiciliaries before they became domiciled. The plans are now to make amendments to the CGT and IHT rules for offshore trusts.

For more information please contact Alastair Byrne on 01904 717260 or email him at ajb@jwpcreers.co.uk