You may have seen news reports on how changes to UK non-dom status have been put on hold. The Finance Bill 2017 was to have included all relevant legislation on the non-dom rules changes, but the final version which went through Parliament yesterday omitted the details on non-doms, along with several other areas. The key questions at present are:
Why were the changes put on hold?
The changes were dropped, along with a significant part of the Finance Bill, as there was not enough time to scrutinise them before Parliament was prorogued before the 8th June election. We understand that this government remains committed to the non-dom proposals.
When will the non-dom rules be re-introduced?
This will not take place before the election. The Financial Secretary to the Treasury has stated that they will legislate for the provisions at the earliest opportunity in the next Parliament, but this will inevitably be dependent on the outcome of the election. However, it is extremely unlikely that they will be dropped entirely, whatever the make-up of the next government, and we expect that the rules will be back-dated to 6 April 2017 when they are finally introduced.
Are they likely to be changed?
This is hard to predict with certainty, but our view is that it is unlikely that there will be any substantive changes. If anything, it is likely that some parts of the proposed rules that were not included in the Finance Bill may well be included in a second Finance Bill after the election. If the next government were to be a coalition, or even a Labour government, the non-dom rules could indeed be made more restrictive, or non-dom status abolished completely.
Where does this leave me?
If you have already made changes to your asset planning in order to account for the changes, then this is unlikely to have been done in vain. You should proceed largely on the basis that the rules will be effective from 6 April 2017.
However, it is sensible, pending any further clarification, that long term non-doms who are anticipating being taxed on a worldwide basis do not remit foreign income/gains from the current tax year yet, just in case the delay in implementation of the rules provides you with another year under the remittance basis. Likewise, decisions regarding the sale of assets which would have benefitted from rebasing in April 2017 should be put on hold if possible.
We are tracking developments in relation to the non-dom rules closely, and are in dialogue with HMRC to find out their position. We will be in touch again when we have further information. In the meantime if you would like to speak to someone please contact your usual lawyer.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
