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August 04, 2020

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August 03, 2020

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Update on UK Domicile and Tax of Offshore Trusts

Implementation of the 6 April 2017 tax changes applicable to non-domiciled individuals, offshore trusts and United Kingdom residential property has been delayed because of the forthcoming UK General Election on 8 June 2017. Whilst it is unlikely that the changes will be dropped (especially if the current Government is re-elected), a concern that rushing the legislation through Parliament could result in unworkable legislation has resulted in an unexpected window of uncertainty which will not close until after the election.

In the run-up to 6 April 2017, many clients and advisors took action to prepare for the extensive changes expected to come into effect from that date. These changes included provisions to:

  • Treat individuals who were resident in the United Kingdom for 15 of the past 20 tax years to be deemed domiciled for all tax purposes

  • Treat individuals resident in the United Kingdom who were born in the United Kingdom with a UK domicile of origin to be deemed domiciled for all tax purposes

  • Change the tax treatment of offshore trusts

  • Charge inheritance tax on the value of non-UK companies attributable to UK residential property and certain loans (and related security) used to acquire such property

However, on 18 April 2017, the Prime Minister announced a snap general election and Parliament voted for it on 19 April, significantly shortening the timetable for passing the Finance Bill. Professional advisors wrote to the Government requesting that these changes, and other complex parts of the Finance Bill 2017, not be rushed through before the dissolution of Parliament. It was confirmed on Tuesday 25 April 2017 that these provisions will not be enacted before the election.

The Chartered Institute of Taxation has indicated that these changes likely will be introduced following the election, regardless of the election result. However, no clarification has yet been provided regarding from when the changes will apply.

© 2020 McDermott Will & EmeryNational Law Review, Volume VII, Number 117


About this Author

Claire Murray, Estate, Trust, Tax, McDermott Law Firm, Attorney

Claire Murray is an associate in the law firm of McDermott Will & Emery UK LLP, based in its London office. Claire has extensive experience advising individuals, beneficiaries and offshore trustees on a variety of estate, trust and UK tax and compliance issues. She advises clients on integrated international tax planning and structuring, including inheritance and estate planning, and on migration planning including advice on residence, domicile and double tax treaty issues. 

44 20 7577 6942
Abigail Nott, International Tax, Trusts, Estate Planning, Lawyer, Mcdermott Law

Abigial Nott advises clients on various international and onshore private client matters. She focuses on tax and trust and estate planning for UK and non-UK individuals, with an emphasis on integrated international tax planning and structuring. Abigail joins the Firm from a renowned law firm based in London, where she was able to take part in a twelve month secondment in Zurich, Switzerland.

+44 20 7570 3477
Simon Gibb, McDermott Will, London, domiciled individuals lawyer, trust assets protection attorney

Simon Gibb focuses his practice on tax advice, trust and estate planning for UK and non-UK resident and domiciled individuals, including on the protection and devolution of trust assets. While he advises on all aspects of personal taxation and structuring, his practice has an emphasis on the structuring of family businesses through trusts and foundations. Simon is regularly involved in both non-contentious and contentious tax work.

Simon also advises individuals, family offices and trustees of offshore settlements on trust law matters and UK tax...

44 20 7577 6932