Non-dom planning thrown into chaos by Finance Bill changes

Share this content

Andrew Robins, private client tax partner at RSM, explains why the scrapping of the new tax regime for non-domiciled individuals, is not good news for those taxpayers.

Election fallout

It was inevitable following the announcement of the June general election that not all provisions included in the 2017 Finance Bill would be made law before Parliament is dissolved. This is a question of available Parliamentary time: provisions that need scrutiny, or are contentious, simply cannot be subject to adequate debate in the Parliamentary sessions remaining.

As is normal in these circumstances, the government and opposition have met and agreed which provisions can be pushed through, and which will need to be deferred. However, the outcome of this agreement came as a surprise to many of us and will create unwelcome uncertainty amongst many non-domiciled individuals in particular.

Careful planning

The wholesale change to the way in which non-domiciled individuals are taxed in the UK has been a work in progress for some months now. The Treasury published detailed draft legislation last year which was subject to a public consultation process, and was amended significantly as a result.

Further consultation took place on the amended legislation, and, after the Finance Bill 2017 was published, HMRC and the Treasury continued to meet with interested parties to refine the Bill. Given all of this work, and the fact that the thrust of the government’s policy has remained constant throughout, it was generally assumed that the non-dom provisions would be included in the shorter Finance Bill, but this has not happened. Instead, all of the proposed changes have been withdrawn.

Not good news

It might be thought that this would be good news for non-doms, but in many cases this will not be true. Because the new rules were due to apply from 6 April 2017, many non-doms have planned and acted already based on the draft legislation. In two areas in particular, actions have already been taken that could have significant tax implications if the draft proposals are not reintroduced later with the original start date of 6 April 2017: asset rebasing, and cleansing of foreign bank accounts.


In some circumstances, non-UK assets held by non-domiciled individuals were due to be rebased for CGT purposes as of 5 April 2017. This means that the sale of the asset at its 5 April value would not give rise to a UK tax charge. Many non-doms will have sold rebased assets shortly after 5 April to ensure that the sales price and the rebased cost of the asset were the same. If the rebasing does not go ahead, these individuals will have realised a capital gain unnecessarily, and may suffer significant tax charges as a result.


All non-doms were due to be able to “cleanse” foreign bank accounts, separating out untaxed foreign income and gains from tax paid and tax free money. For non-doms who have already undertaken this cleansing, and who have brought what they thought were non-taxable funds into the UK, the removal of the cleansing provisions could again give rise to large tax liabilities.

In both cases (rebasing and cleansing), because individuals have already acted, there is no way to turn back the clock unless some form of transitional relief is introduced, or unless the legislation is reintroduced with effect from 6 April 2017.

In practice, unless the new government decides to pass a post-election Budget, this may not happen, leaving many non-doms to suffer significant, and entirely avoidable, tax charges as a result of relying on the anticipated reliefs.

About Andrew Robins

Andrew Robins

Andrew Robins is a partner in RSM’s London private client tax team, advising on all areas of UK personal taxation. He specialises particularly in advising high net worth individuals, non-UK domiciled individuals, non-UK trusts, and members of corporate remuneration plans such as employee benefit trusts and international pension plans.


Please login or register to join the discussion.

There are currently no replies, be the first to post a reply.