Private client tax partner RSM
Share this content
St Ives

Non-doms tax reform: So close but yet so far

25th Jul 2017
Private client tax partner RSM
Share this content

Andrew Robins thinks he can see the end of the road for the reform of the tax rules for non-domiciled individuals, but we are not there yet.   

I remember family trips to the beach as a child. As soon as I saw a glimpse of the coast I would get increasingly excited and frustrated as the car took forever to reach the sea.

As an adult, I found myself feeling a very similar mix of emotions as I read a statement from the new financial secretary to the Treasury, Mel Stride, on 13 July, announcing that:

“The Government…expects to introduce a Finance Bill as soon as possible after the summer recess containing the withdrawn provisions. Where policies have been announced as applying from the start of the 2017-18 tax year or other point before the introduction of the forthcoming Finance Bill, there is no change of policy and these dates of application will be retained. Those affected by the provisions should continue to assume that they will apply as originally announced.”

We can now see the changes for non-domiciliaries (non-doms) coming into focus on the horizon, but the road to get there is not straight, and I am straining my eyes to work out whether the water is calm, or choppy and full of rocks.


After nearly five months of hiding beneath the waves, the rules governing the taxation of long-term UK resident non-doms resurfaced with the financial secretary’s statement, as the Treasury published a new version of the draft legislation. Reassuringly, the new draft has not grown any new teeth, being entirely based on the legislation published in the original 2017 Finance Bill. There are changes to the original proposals, but these are technical amendments designed to ensure that the new rules work as originally intended.

As a result, and subject to parliamentary consent, we now know that the following changes will apply from 6 April 2017.

  • Individuals will become UK deemed–domiciled for all tax purposes once they have been UK tax resident for at least 15 of the previous 20 tax years.
  • Deemed domiciled individuals will lose the ability to elect to be taxed on the remittance basis.
  • Anyone becoming deemed-domiciled on 6 April 2017 who has paid the remittance basis charge at least once will qualify for capital gains tax (CGT) rebasing of foreign assets.
  • There will be a two year period to ‘cleanse’ mixed fund bank accounts for all non-doms.
  • Offshore trusts created before the settlor becomes income tax/CGT deemed-domiciled will have ‘protected’ status, allowing foreign income and gains to roll up and tax to be deferred if certain conditions are met.
  • UK residential properties held via non-UK companies will be subject to IHT charges.

Unseen rocks

So, is it safe to dive in and undertake tax planning based on the draft legislation? Probably – but there is still a risk of suffering a nasty bite. We have already seen backbench MPs influence policy due to parliamentary mathematics, and it is not impossible that some reliefs and protections being offered to non-doms could be sunk as they pass through the parliamentary process.

It would, to say the least, be unfortunate if planning, undertaken before the second 2017 Finance Bill receives royal assent, suffers a tax charge as a result of legislation changing again, and in truth this is now unlikely. Individuals with a strong non-tax reason for acting need to understand the potential cost of such amendments and proceed with caution, but can think about acting. Anyone else should continue to hold off until the legislation is finalised, to be on the safe side.

In either case, to misquote Douglas Adams, we may not yet be home and dry, but perhaps we are at last on the beach and vigorously towelling ourselves off.


Replies (0)

Please login or register to join the discussion.

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