Fundamental changes for non-UK domiciled individuals | KPMG | UK
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Fundamental changes for non-UK domiciled individuals

Fundamental changes for non-UK domiciled individuals

Non doms - are you ready for the fundamental change in the compliance landscape that starts on 6 April 2017?


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Who should read this? 

Non- UK domiciled individuals and people holding or lenders financing UK residential property that is held through certain non-UK structures

Summary of proposal 

From Thursday 6 April 2017 there is a fundamental change in the compliance landscape for long term UK resident (i.e. UK resident for 15 out of the last 20 tax years) non-UK domiciled individuals – from this date worldwide income and capital gains will need to be reported to HMRC and UK tax paid thereon.

Non-doms and their advisors will need to ensure that from 6 April 2017 robust and accurate records are maintained of worldwide income, gains and assets and be able to extract the information necessary so the individual is able to report the correct amounts to HMRC. With a substantial amount of information currently being shared between the authorities of many different jurisdictions, with more to be shared in the future and HMRC raising the stakes for inadvertent errors, a non-dom needs to be comfortable that they are reporting the correct amounts. It will also be necessary to work out how much additional UK tax will be due and the cash flow requirements of paying the correct amount of tax on time.  

As these are such major changes for people currently subject to the existing remittance basis rules, the UK Government is introducing various transitional provisions and reliefs.  These also include a ‘protected’ status for certain types of offshore trust. But the rules are complex and it is therefore important that non-doms understand how they will be impacted and if their various holding structures and investment portfolios are still fit for purpose.    

The new rules were first announced in July 2015 and there has been a period of consultation. Draft legislation has been issued in stages most recently in December 2016, January 2017 and a further update on 20 March 2017. However despite the new rules taking effect from 6 April 2017, although much of the detail is now confirmed there are still some areas of uncertainty.

The 20 March 2017 draft legislation provides further clarity on a number of areas including further details about the ‘protected trust’ regime for settlor interested non-UK resident trusts post 6 April 2017. Provided the settlor makes no direct or indirect additions to the trust (i.e. does not ‘taint’ it) on or after 6 April 2017 at a time when he is deemed domiciled in the UK, this will mean that the settlor is not taxed on the arising basis on non-UK trust income and capital gains. The draft legislation includes guidance on circumstances that do not constitute ‘tainting’ a trust and it includes rules to charge settlors to income tax when a member of their close family receives a benefit. New provisions on how to value the use of a trust asset by a beneficiary for tax purposes are also covered.


6 April 2017 

Our view

The new Finance Bill clauses provide greater clarity on the operation of some the rules for example the ‘protected’ trust provisions, cleansing and IHT for both the holders of and lenders financing UK residential property that is held indirectly. It is to be welcomed that some of the more complex provisions in the original proposals for offshore trusts appear to have been delayed.

For further information see

Big changes for non doms

UK residential property


Mike Walker +44 (0)20 7311 8620

Rob Luty +44 (0)161 246 4608

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