As previously announced, the changes to the taxation of non-domiciles will come into effect from April 2017. These will treat individuals as deemed UK domiciled for all taxes if they:
- have been UK resident for 15 of the past 20 years;
- were born with a domicile of origin in the UK; or
- have acquired a domicile of choice in another country but are resident in the UK for the tax year.
In addition, also from April 2017, inheritance tax (IHT) will be charged on all UK residential property whether held directly or indirectly through an offshore structure.
While most of the detail of the changes has already been announced there are some changes to the proposals following consultation on the draft legislation issued in December 2016.
Firstly, the limit below which minor interests in UK property are to be disregarded for IHT purposes has been increased from 1% to 5% of an individual’s total property interests. Secondly, income, gains and capital held in mixed funds from years prior to 2007/08 may also take advantage of the segregation rules.
The changes will be legislated within the Finance Bill 2017 and will have effect from 6 April 2017.
These changes are only minor and the overall rules are as previously stated. Any non-domiciled individuals who are affected by the changes are therefore advised to review their affairs now if they have not already done so.