Measures in the UK Finance Bill – debated in the Commons on Tuesday – that would potentially impose new charges on owners of UK properties and people with ‘non-domicile’ tax status have been stripped out because of the short time available before the election on 8 June.
Island tax specialists say that although the measures were intended to take effect from 6 April, that will no longer apply. However, they anticipate that if the Conservative Party is voted back in, the changes will be brought back to the table, possibly for enactment in April 2018.
In an overnight tax alert, John Shenton, director at Grant Thornton, said: ‘As part of the UK pre-election arrangements the 2017 UK Finance Bill has been drastically shortened to pass it while Parliament is still sitting. Several chunks of anticipated new tax legislation have thus simply been removed.
‘This includes all the non-dom and UK residential property inheritance tax changes.’
Mr Shenton said more details would emerge over the next few days, but that essentially the new laws would ‘simply now not be passed into legislation’.
He added: ‘It seems clear that these changes will not have now occurred, as everyone expected, on 6th April.
‘We can expect the new re-elected Conservative government (a big assumption in itself) to re-introduce the changes, as they have spent the last two years consulting and agreeing them.
‘For those who have planned and carried out reorganisation, we believe it is just a question of time before those changes do come back in, so it has not all been in vain.’
EY Channel Islands partner and head of tax Wendy Martin said the cuts affecting Island practitioners included all of the changes to the UK non-dom regime; inheritance tax on overseas assets representing UK residential property; restriction of income tax and corporation tax relief for disguised remuneration schemes; and corporate interest and loss restrictions for UK corporation tax.
Mrs Martin said that some parts of the legislation would still apply, including taxation of foreign pensions income and charges on transfers to an offshore pension.
She added that the cuts in the Finance Bill did not affect the new Criminal Finances Bill which is due to come into force in September, specifically the ‘corporate criminal offence’ which is tipped to have widespread repercussions for tax planners and advisers.
