Author
With the timing of the general election, it is likely that the current government has run out of time to enact the abolishment of the remittance basis and any significant inheritance tax changes.
More time is a good thing. The proposed changes are too important to be rushed. Unfortunately, the mere announcement of the government’s proposals has prompted many high net worth individuals to leave the UK. The knock-on effects of such departures are being felt elsewhere, for example, with disrupted property transactions, lower independent school and university applications, companies leaving the UK, and fewer listings on the London Stock Exchange. We hope these consequences will make any new government question how much tax revenue the proposed changes will generate, or whether the changes could mean further damage to an already weakened economy.
HMRC have been running listening sessions to obtain feedback on the government’s non-dom proposals from advisors and clients. These sessions have now been paused in light of the July election. Whilst this hopefully won’t mean any new government will have to start from scratch, we think it’s likely that there will be a period of consultation to properly shape these changes. This means we also think it’s unlikely that any new government will enact significant changes before 6 April 2025.
Whenever there are significant changes are on the horizon, we suggest clients consider making use of existing rules whilst they remain available. This means planning conversations should be taking place as to what to action should be taken prior to the next tax year. Please see below for our non-dom check list.
Non-Dom Checklist
Here are some points we would recommend non-dom clients consider and discuss with an advisor:
- Whether remittance basis users should remit funds now to crystalise current tax rates
- Whether to make lifetime gifts now
- How to make use of reliefs such as business property relief now
- Whether to take steps to “rebase” offshore assets now on the remittance basis, in the event they will be taxed on the arising basis going forwards
- Identify who the economic settlors of existing offshore structures are
- Who the settlor (where there are options) should be for new structures
- Loans to existing structures which will continue to be protected settlements
- The tax treatment of trust investments and using offshore bonds
- whether existing structures are fit for purpose
- Using a UK holding company
- Co-ownership and insurance planning for potential increased inheritance tax exposure
- Options for relocating and reducing time spent in the UK
- Alternative family investment structures
- Onshoring certain structures
If you would like to discuss any of the options referred to in this briefing note, please contact Dhana Sabanathan.
Author