Snap UK election leaves non-doms and investors in UK residential property in a spin
UK resident non-doms were anticipating significant changes to their UK tax position from 6 April 2017, but the recent general election has left the situation uncertain.
A number of changes affecting non-doms and investors in UK residential property had been expected to take effect from 6 April 2017, including a proposed new deemed domicile concept for UK income and capital gains tax, potential rebasing of assets and cleansing of mixed funds.
Also from April 2017, the UK inheritance tax net was to be extended to include all UK residential properties owned through non-UK companies, regardless of the domicile of the beneficial owner.
However, the snap general election held on 8 June resulted in these and several other anticipated new rules being removed from the Finance Bill before the Finance Act 2017 became law. Taxpayers who would have been affected by the new rules suddenly faced uncertainty as to what the new rules would be.
UK election result: clarity at last?
There are growing fears among taxpayers and commentators that the UK Government may not reinstate some key tax changes dropped from the Finance Bill 2017, including the non-dom reforms, after the Conservative Party lost its majority in the election.
The election resulted in a hung parliament with no political party gaining sufficient seats to form a majority government. Consequently, the British Prime Minister, Theresa May, was forced into negotiating an arrangement with the Northern Ireland Democratic Unionist Party to allow her to stay in office with a Conservative minority government. It may be several months before the political wrangling settles down and changes may be required to the proposed new tax rules in order for them to pass through parliament.
Given that the UK 2017/18 tax year is already well under way, this raises questions aboutthe date from which any new rules will apply – from 6 April 2017 as previously stated or perhaps from 6 April 2018?
Many non-doms will have taken action in advance of the anticipated new rules coming into force on 6 April 2017. If further changes are made to the new rules, or if they are delayed a year so that they take effect from 6 April 2018, it could adversely affect taxpayers who acted in good faith. For the time being, taxpayers can only wait for the final position to become clear at last.
For more information, contact:
Abacus Trust Company Limited, Isle of Man
T: +44 (0)1624 689608