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UK tax reforms affecting expats put on hold until after election
| Published: | 5 May at 6 PM |
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Changes to the UK’s domicile laws about to take place have now been shelved until after the snap general election.
The move to temporarily axe several clauses in the 2017 Finance Bill took place at the end of last month, by which time the new rules should have already been activated. Key clauses affecting British expatriates resident in Spain and other EU destinations were deleted from the 760-page bill, the longest Finance bill produced by any UK government. The domicile rules put on hold deal with income tax, capital gains tax and inheritance tax, and also include the formerly resident domicile rule as well as the 15 out of 20 year deemed domicile rule.
For now, the existing 1 out of 20 year UK residence domicile rule will stay in place. Also on hold are the proposed alterations to the protection of overseas trusts rule applied to those with UK domiciles who have returned to Britain from overseas after settling a trust. The new rule stated the trust would cease to be excluded property whilst the settler remains a UK resident, making the settler liable to inheritance tax. As it’s now on hold, trusts dealt with in this manner remain excluded property.
Also on hold are changes to the inheritance tax rules on UK residential properties held as corporate structures, resulting in inheritance tax being charged. At present, such properties will remain outside the inheritance tax requirements.The reduction of the dividend nil rate band to £2,000 from £5,000 due on 18 April is now on hold, as is the amount which can be reintroduced tax-free into an active private pension, on which the former £10,000 was due to be cut to £2,000.
Also dropped is a new rule allowing taxpayers to appeal against tax levied on a high ‘chargeable event gain’ caused by withdrawing cash from a bond. Whether the proposed new laws will be reintroduced after the general election is unclear, particularly as several should have been brought in from 6 April, with the rest due in 2018 or later. According to the UK Financial Secretary, should the present government be re-elected, legislation activating the axed new laws will be enacted, adding the next Finance Bill is due later this year.
Unfortunately, the controversial new 25 per cent tax on transferring UK pension pots to QROPS in jurisdictions outside the European Economic Area as announced in this year’s spring budget will stay in place, and is due on transfers made from 9 March this year onwards.
Source: ABCMallorca
The move to temporarily axe several clauses in the 2017 Finance Bill took place at the end of last month, by which time the new rules should have already been activated. Key clauses affecting British expatriates resident in Spain and other EU destinations were deleted from the 760-page bill, the longest Finance bill produced by any UK government. The domicile rules put on hold deal with income tax, capital gains tax and inheritance tax, and also include the formerly resident domicile rule as well as the 15 out of 20 year deemed domicile rule.
For now, the existing 1 out of 20 year UK residence domicile rule will stay in place. Also on hold are the proposed alterations to the protection of overseas trusts rule applied to those with UK domiciles who have returned to Britain from overseas after settling a trust. The new rule stated the trust would cease to be excluded property whilst the settler remains a UK resident, making the settler liable to inheritance tax. As it’s now on hold, trusts dealt with in this manner remain excluded property.
Also on hold are changes to the inheritance tax rules on UK residential properties held as corporate structures, resulting in inheritance tax being charged. At present, such properties will remain outside the inheritance tax requirements.The reduction of the dividend nil rate band to £2,000 from £5,000 due on 18 April is now on hold, as is the amount which can be reintroduced tax-free into an active private pension, on which the former £10,000 was due to be cut to £2,000.
Also dropped is a new rule allowing taxpayers to appeal against tax levied on a high ‘chargeable event gain’ caused by withdrawing cash from a bond. Whether the proposed new laws will be reintroduced after the general election is unclear, particularly as several should have been brought in from 6 April, with the rest due in 2018 or later. According to the UK Financial Secretary, should the present government be re-elected, legislation activating the axed new laws will be enacted, adding the next Finance Bill is due later this year.
Unfortunately, the controversial new 25 per cent tax on transferring UK pension pots to QROPS in jurisdictions outside the European Economic Area as announced in this year’s spring budget will stay in place, and is due on transfers made from 9 March this year onwards.
Source: ABCMallorca
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