In his Autumn Statement 2016 the chancellor announced the following measures relating to non-domiciled individuals and offshore structures:

Domicile status and inheritance tax

As previously announced, from April 2017 the following changes will be made for non-domiciled individuals ('non-doms'):

  • Permanent non-domiciled status ceases: the deemed domicile rules are extended to cover Income Tax and Capital Gains Tax (CGT). The number of years of UK residency required will also change for deemed domicile to 15 out of 20 years.
  • Inheritance tax (IHT) will be charged on UK residential property where held indirectly by a non-dom via an offshore structure, such as a company or a trust. This closes a loophole used to avoid IHT on a non-dom's UK residential property.
  • Draft legislation was initially released as part of HMRC’s consultation into these proposed new rules and further details are awaited with the Finance Bill 2017.
  • See Non-domicile status & tax

Business Investment relief

  • From April 2017 a proposed rule change will make it easier for non-doms who claim the remittance basis to bring offshore money into the UK for investing in UK businesses.
  • The government will continue to consider further improvements to the rules for the scheme to attract more capital investment in British businesses by non-doms.
  • Draft legislation for Finance Bill 2017 is due to be published in December.
  • See Business Investment Relief

Offshore structures and funds

  • The government will consult on a new legal requirement for intermediaries arranging complex structures for clients holding money offshore to notify HMRC of the structures and the related client lists.
  • UK taxpayers invested in offshore reporting funds pay tax on their share of a fund’s reportable income, and capital gains tax on any gain on disposal of their shares or units. The government will legislate to ensure that performance fees incurred by such funds, and which are calculated by reference to any increase in the fund’s value, are deductible against gains rather than income to bring it into line with onshore funds. 
  • Following consultation, the government are introducing a new legal requirement to correct a past failure to pay UK tax on offshore interests within a defined period of time, with new sanctions for those who fail to do so. See Worldwide Disclosure Facility for the current open disclosure opportunity and details of the consultation.

Back to Autumn Statement 2016: Highlights and Headlines