Many UK resident non-UK domiciled individuals (non-doms) are about to pay tax on worldwide income and gains for the first time and those with UK residential property might be newly exposed to Inheritance Tax both during life time and on death.
On Friday 19th August 2016, the Government progressed to the next stage of the domicile changes with the publication of a further consultation document which sets out further details about the new rules taking effect from April 2017.
We are analysing the detail in the new document and will provide a further update of the key changes and new information at the beginning of next week. In the meantime, to give you a flavour of some of the issues being considered by non doms, below are extracts from our article for non-doms in the July 2016 edition of KPMG Private Client’s magazine, ‘Personal Perspectives’.
“Today’s dilemma for a non-dom is – do I wait until the proposed new rules are clear and final – or do I act now? To answer that properly, each non-dom needs to weigh up the risk of making changes that may eventually turn out to have a higher cost than was initially anticipated against the risk of running out of time to make changes that, if implemented earlier, would have been commercially desirable.
Identifying and confirming short, medium and long term commercial and family and objectives is key. This often involves multigenerational aspirations … There may be a wide range of assets … located in various countries each with different funding arrangements. Usually asset protection, growth and cash flow requirements all need to be balanced.
It takes time to identify and decide upon a suitable strategy and then, for more complex situations, it may take several months to implement a chosen plan …
Some issues being considered by non doms include:
- Given that worldwide income and gains will for the first time be subject to UK tax, are the existing structures for holding and managing assets and indeed the assets themselves still appropriate?
- How to balance direct ownership of assets against ownership via trust structures when there are both pros and cons of the new trust proposals?
- Is it clear how new UK tax liabilities may be funded?
- How might any changes dovetail with other commercial considerations?
- Is it possible to segregate pre and post April 2017 bank accounts?
- Do individuals or companies need to review their residence status?
We are finding it is best to start now to work out what is at stake, to prepare a plan and to work out when the decision to implement it would have to be taken for completion by 5 April 2017.”
Source – KPMG August 2016