You and your clients deserve to have a degree of certainty about rules that affect your daily lives.
This week changes to inheritance tax and non-domiciled individual taxation rules were dropped in their entirety from the Finance Bill 2017 after prime minister Theresa May did a major U-turn and decided she would hold a general election on 8 June.
In order to get the bill through parliament before we faced another barrage of flyers through our letterboxes from earnest faces in suits begging you to elect them as your member of parliament, huge swathes of rules were dropped.
Given the upheaval the non-dom taxation changes caused for these individuals, the ditching of these rules was particularly surprising and unsettling.
The government can make as many U-turns as they like and seemingly never have to apologise.As Rupert Clarey, partner at family office firm Maitland, points out: “Many non-doms and high net worths would have been organising themselves and making significant decisions on the basis that the new regime will have taken effect from 6 April 2017.”
The changes to non-dom tax rules would have increased the tax take from these individuals from 6 April.
To recap, the rule change would have deemed individuals who had been UK tax resident for more than 15 out of the previous 20 years to be UK domiciled.
They would no longer qualify for the ‘remittance basis’ and become subject to income tax and capital gains tax on their personal worldwide income and gains.
In addition, inheritance tax could become due on their worldwide assets.
Final legislation for the non-dom tax changes was only published on 20 March following numerous delays.
As a result of the government dragging their heels with the finer details, many people were required to reorganise their affairs in a hurry and at considerable expense during a two week window.
Will they get that expense refunded by the government? Of course they won’t.
Unlike this industry the government can make as many U-turns as they like and seemingly never have to apologise or pay for the expense their sudden changes of heart cause.
This latest turn of events will be incomprehensible to many non-doms.
I know I have said it before, but following the cull of tax changes in the Finance Bill I think it needs saying again.
As we approach exiting the European Union the people who lead us need to look like they know what the hell they are doing.
People need to know what they face tomorrow and be confident that if they carefully plan they will benefit from that action.
What went on with the Finance Bill this week does not reassure anyone.
As Chartered tax adviser Mark Davies so beautifully sums up: “Non-doms who intended to fund their lifestyle in the UK by taking advantage of the rebasing election or the cleansing provisions will now need to wait until next year.
“This may mean that plans to sell rebased assets may now need to be deferred.
“The government’s decision to halt many of the provisions of the Finance Bill after the date that they were due to take effect is shambolic.
“Many non-doms would have taken advice and either left the UK, restructured or accepted the additional tax. Now those most prepared, may find that their planning is now defunct.
“For instance some may have retained assets in their personal name, sold them post 6 April 2017, expecting to be able to claim the rebasing election.
“This would mean that only the gains post 6 April 2017 would become taxable and the proceeds would be a source of funding in the UK. But now this does not work.”
It is likely these changes will return in a future Finance Bill, whatever the sitting government, and could take effect from 6 April 2018.
While non-doms who had missed the earlier 5 April 2017 deadline to restructure their affairs ahead of the new rules coming into force may now have time to do this it clearly wasn’t the intention of the government to help these people by taking this action.
What a shambles. What a mess.
If you were given ample notice and yet still failed to get your clients finances in order in time for a major tax change, leaving them out of pocket, it is quite right that you should have to cough up compensation.
Yet the UK government can change their minds and not even be expected to issue an apology. I am disgusted by it all.
