Earlier this week, the House of Commons made the shock decision to delay long-anticipated changes to the way non-UK domiciles are taxed, which were set to come into force on 6 April.
The delay is a result of British prime minister Theresa May calling a snap election for 8 June, forcing the Government to rush through the Finance Bill in just four hours during a House of Commons debate on Tuesday.
As a result, the government has pushed back a number of significant proposals including cuts to the Money Purchase Annual Allowance (MPAA), the Pension Advice Allowance (PAA) and cuts to the tax free dividend allowance.
Non-doms in ‘limbo’
Many non-doms will now be in “limbo”, said Nimesh Shah, partner at law firm Blick Rothenberg, as it is expected that a second Finance Bill will be published after the election and the majority of the dropped changes will be re-introduced and backdated to have effect from 6 April 2017.
“It is unbelievable that such important provisions have been dropped at the 11th hour, after the painful amount of work that has gone into the process to finalise the legislation.
“It is even more disappointing for those non-domiciled individuals who were readying themselves for the changes and arranging their affairs in the run-up to the end of the (5 April 2017) tax year,” he said in a statement.
“Non-domiciled individuals will now face a period of limbo, waiting for the outcome of the election and publication of the second Finance Bill. This will be the second time in three years that we will have two Finance Acts in a year, adding to yet more tax legislation.”
Meanwhile, a spokesperson for tax and advisory firm Trident tax said the “delay will be a source of great frustration and anxiety” to many clients and their advisers because “major restructuring was required by 5 April 2017 to avoid the negative effects of the new regime”, which has been planned by the UK government for almost two years.
Back-dated reforms
Chris Groves of international law firm Withers, said although it was a surprise move, he believes clients who have already made changes “have not done so in vain” as he also expects the rules to be implemented and back-dated to 6 April.
