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UK delays non-dom and IHT reforms in shock election move

The UK government has delayed the introduction of long-awaited changes to the rules governing non-UK domiciles, which were set to go live earlier this month.

UK delays non-dom and IHT reforms in shock election move

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The extension would have seen IHT charges apply to both individuals who are domiciled outside the UK and to trusts with settlors or beneficiaries who are non-domiciled.

Temporary delay

Rachael Griffin, financial planning expert at Old Mutual Wealth, told International Adviser: “I think it is highly likely that the non-domicile changes will happen, especially as this was part of the pledges made by the government in the last general election.

“This does provide a period of uncertainty for those who are approaching the 15 year cut off in the next few months, and many may choose to take a cautious approach and plan for the implementation of the proposed clauses. For those without an immediate issue they may decide to hold tight until the changes are confirmed.”

George Bull, senior tax partner at international consultancy firm RSM, said the UK has “dropped whole swathes of the legislation” from the Finance Bill.

“The main principle seems to have been that clauses which will apply to 2017/18 have been retained but clauses relating to future years have been dropped.

“The non-dom changes are a significant exception to this: although the official start date was intended to be 6 April 2017, it seems that the draft legislation has been dropped.

“In the current absence of any formal announcement to the contrary, individuals affected by these changes may have taken action on the basis they would be introduced with effect from the intended date, so I can see a very good reason for those start dates to be retained, but this is by no means certain and there may be cases where the delay may impact transactions etc.

“The start date for other measures may well be deferred.

“The non-dom clauses which have been dropped, much will depend on what happens after the election. If there is a return of a Conservative government we would expect that the clauses will be reinstated in a summer finance bill. If there is a change of government all bets are off,” he told IA.

Rupert Clarey, a partner at global advisory firm Maitland, said: “It is surprising and unsettling that a law which impacts many families, has been delayed and possibly dropped completely after people have spent time coming to terms with it.

 “Many non-doms and HNWs would have been organising themselves and making significant decisions on the basis that the new regime will have taken effect from 6 April 2017. Today’s announcement just adds to the uncertainty and unease non-doms feel regarding the stability of the current regime.

“Final legislation was only published on 20 March following numerous delays. This latest turn of events will be incomprehensible to many. People deserve to have a degree of certainty and stability on rules which affect them.”

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