15 May 2017 3:24 PM

One of the proposed changes to the taxation of non doms with effect from 6th April 2017 related to UK residential property owned through various structures.

Only the UK assets owned by non doms are subject to Inheritance tax (IHT). In the past offshore companies were used as a vehicle to own UK residential property. This meant that what the individual actually owned was shares in an overseas company and therefore when they died their estate did not have an IHT liability

One of the major changes planned was that offshore companies would be “looked through” and individuals would be taxed as if they owned the properties personally. 

These changes were announced in July 2015 and the draft legislation has been issued in various stages since then. Although much of it was very late in being issued it was expected to become law as part of the Finance Bill 2017.

The Government and the Opposition agreed that due to the snap General Election there would be insufficient time before the dissolution of parliament on 3rd May to discuss all of the clauses of the Bill. This led to more than half of the original Bill being removed. These were the more controversial and complex clauses. All references to the changes relating to non doms were cut from the Bill.

This means an extension to the period of uncertainty. This does not mean that the proposed non dom changes have been scrapped. The legislation enacting them has been shelved until after the General Election and it is likely that a further Bill will be issued at some point later this year.

Although there is nothing definite at this stage, it is expected that the proposed changes will be introduced as planned once the dust has settled after the General Election.