The second Finance Bill of 2017, which was published on September 8, brought changes that were originally expected in April but which were postponed for the snap general election earlier this year. The Bill reinstated several key clauses that were removed before the general election: pensions and tax-free dividend allowances, but the biggest change remains the non-doms tax reforms.
The measures in the 2017 Finance Bill will significantly change the UK tax regime for non-domiciled individuals, including treating those who have lived in the UK for 15 of the last 20 years as domiciled. This would be a considerable change from previous legislation, which allowed non-doms to use the remittance basis indefinitely.
The Bill will also alter the UK tax treatment of ‘formerly domiciled residents’: those who were originally UK domiciled but moved abroad to make their permanent home in another country and are UK resident in the short term, such as a work secondment. While they remain non-UK domiciled for all other purposes, they will be treated as UK domiciled for tax purposes while UK resident.
In relation to Inheritance Tax, UK residential property held through a non-UK corporate entity owned by a non-dom or certain types of trust were formerly protected from inheritance tax. With effect from 6 April 2017, this has stopped: the shares will be treated as UK inheritance taxable assets, as will loans and security for loans used to buy UK residential property.
The most recent incarnation of the Finance Bill contains these significant changes above, which have been discussed at length since they were included in the earlier Bill in March 2017. Draft clauses for the 2018 Finance Bill were published on September 13 for consultation. This included a consultation on further changes to the taxation of benefits received from offshore trusts by UK residents to take effect on 6 April 2018. This consultation follows less than a week on from the Finance Bill 2017 published on 9 September 2017 which, when it becomes law, would be the second longest Finance Act in history.
The full text of the Finance Bill 2018 will be published after the Autumn Budget which the Government announced will take place on 22 November 2017. Chancellor of the Exchequer Phillip Hammond has planned on reducing the number of fiscal events in the calendar to just one per year, allowing policies to be further scrutinised prior to becoming law on 6 April 2018. This is a welcome change and a vast improvement on Finance Bill 2017 which introduces a number of measures with retrospective effect.
The consultation on the 2018 Finance Bill draft amendments will continue until Wednesday 25 October 2017.
Published: 21 September 2017
Sign up to receive a moment of clarity
A moment of clarity
For general enquiries
0370 1500 100
Or we can call you back at a time of your choice
Request a call back
Phone lines are open 24/7, 365 days a year