As a result of the recent announcement to hold a snap general election in June, the government has had to postpone many measures that were included in Finance Bill 2017 in order to pass through the legislation in a shortened timeframe before Parliament is dissolved on 3 May.

It is expected that most of the measures that have been postponed will be included in another Finance Bill which will be passed as soon as possible after the election. However, it is not yet known at this stage whether these measures will still take effect from 6 April 2017, although initial indications suggest that the measures will be introduced on the date originally planned.

All of the changes relating to the taxation of non-domiciled individuals, which were due to take effect from 6 April 2017, have been delayed. The key measures include:

  • The new rules deeming an individual to be domiciled in the UK for all tax purposes as a result of having been resident in the UK for 15 out of the past 20 tax years.
  • The rules deeming the shares of an overseas company holding UK residential property to be regarded as UK situs assets for inheritance tax purposes.
  • The new regime for the taxation of offshore trusts, that was to apply to all non-domiciled settlors, not just deemed domiciled settlors, including the concept of a ‘protected trust’ that was to apply to trusts settled before the settlor became deemed domiciled.
  • The reliefs relating to ‘rebasing’ and ‘cleansing of mixed funds’ for individuals becoming deemed domiciled as at 6 April 2017.

The delays create much uncertainty for non-domiciled individuals who are affected by these measures, and who may have already put in place arrangements to plan for the changes.

In particular, individuals who were planning to take advantage of the transitional rebasing and cleansing reliefs, and who may have already restructured or sold assets based on the understanding that the reliefs would be available from 6 April 2017, will face a period of uncertainty before the final position is known.

There is also much uncertainty for settlors, beneficiaries and trustees of offshore trusts, as it is not clear whether the proposed ‘trust protections’ will apply from 6 April 2017 in relation to trusts settled before the settlor ‘became’ deemed domiciled.

If the trust protections do not apply, overseas income and gains arising to the trustees could still be taxed on the settlor, and care will need to be taken by trustees before they remit funds to the UK as the remittance could be taxable on the settlor.

It is also unclear at this stage which tax regime will apply to distributions made by trustees since April 2017.

In the event that the measures are postponed until 6 April 2018, this could provide individuals who would otherwise have become deemed domiciled at 6 April 2017 with further opportunities for tax planning, but this is by no means certain at this stage.

Other key measures that have also been removed from the Finance Bill include:

  • The reduction in the tax-free dividend allowance from £5,000 - £2,000.
  • Changes relaxing the requirements for UK companies to obtain the substantial shareholdings exemption on the disposal of a subsidiary trading company.
  • Changes to the taxation of termination payments.
  • The reduction in the money purchase annual allowance for pensions from £10,000 to £4,000.
  • The Making Tax Digital initiative, requiring individuals and businesses to have online tax accounts and make quarterly reports of income and expenditure to HMRC.
  • Corporate tax measures, including changes to carried forward losses and loss relief.


Individuals and trustees who are affected by these measures should seek advice as soon as possible, as certain transactions may need to be delayed until the tax treatment of those transactions is clear.

For those who were planning to take advantage of the transitional rebasing or cleansing reliefs, care should be taken before any transactions are carried out, as there is a possibility that the reliefs may not be available this tax year if these measures are postponed until 6 April 2018.

We are monitoring developments closely and will provide an update as soon as we have any more news.