Tax Alert

Reforms to the taxation of non-UK domiciliaries

The government announced in the Summer Budget 2015 that it  would change the tax treatment of long term UK resident non doms.  UK resident non doms who are either long term residents, or who have a “strong connection” with the UK by virtue of being born in the UK and having a domicile of origin here will become “deemed domiciled” for all tax purposes. These changes will come into effect from 6 April 2017 and will be legislated as part of the 2017 Finance Act.

The newly released consultation develops these proposals further and introduces draft legislation on various areas. These include detailed rules as regards the operation of the deemed domicile rules,  as well as the inheritance tax treatment of UK residential property. In addition, the draft legislation sets out new rules for the income tax and capital gains tax  treatment of deemed  doms as well as setting out certain protections for non-resident trusts. 

The government acknowledges that the draft legislation is not complete and excludes some issues which will be included in the Finance Bill 2017. 

The new consultation also invites views on the ways in which Business Investment Relief could be changed to encourage greater investment from non-doms into UK businesses. This is part of the government’s wider efforts to encourage inward investment in the UK and to encourage entrepreneurial activity in the UK. 

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