In a surprise move, it was announced that a ‘snap’ general election would be held on 8 June 2017 and that Parliament would be dissolved on 3 May. As a consequence, much of the draft legislation within the Finance Bill has been removed in order to accelerate progress through both Houses of Parliament and to allow for Royal Assent to be granted before Parliament is dissolved.
Perhaps most significantly for a number of our clients are the changes to the taxation of non-UK domiciliaries and their non-UK structures which have been omitted from this truncated version of the Finance Bill.
Intended changes which have been omitted from the Finance Bill, include the following (please see our previous blog for further detail on these changes, by clicking here):
- 15 out of 20 year deemed-domicile rule
- UK Inheritance Tax exposure on UK residential properties held via non-UK structures
- Protected trust regime
- The mixed fund cleanse and rebasing foreign asset opportunities.
It is our view that the most likely outcome (particularly if there is no change of government following the election) is that most (or all) of the omitted legislation will be reintroduced and will be included in a subsequent Finance Bill later in the year (in October or November 2017 perhaps) in a largely unchanged format, though we cannot be certain of this.
If however there was a change of ruling party following the general election, there may be more drastic changes to the taxation of non-domiciled individuals and it is feasible that many of the benefits of the current tax regime could be restricted or removed.
Most clients who have recently restructured their affairs should simply wait for the result of the general election on 8 June. We are of course conscious that some clients have already acted on the basis of the draft provisions of Finance Bill No 2 and each situation will need to be reviewed in this regard. Equally if individuals or trustees had been considering restructuring as a result of the previously proposed changes but had missed the 5 April 2017 deadline, we recommend that you take further advice on this as soon as possible as there may be an opportunity to carry out the restructuring before the changes come into effect, though the position at this stage is unclear.
We will provide further updates as additional information becomes available.
If you have any specific questions arising, please do not hesitate to contact any member of the Edwin Coe Tax team.
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Please note that this blog is provided for general information only. It is not intended to amount to advice on which you should rely. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content of this blog.
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