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September 19, 2017

Publication of Finance Bill 2017-2019

The government has published the second Finance Bill of 2017, which contains a number of policies that were dropped from the first Finance Act 2017. The original Finance Bill 2017 was streamlined in order to pass the Bill into Law as a result of the decision to call a snap election in June 2017.

The following legislative changes are included in the latest Finance Bill:

  • a reduction of the dividend allowance from £5,000 to £2,000 from April 2018;
  • measures to tighten and clarify the income tax treatment on termination payments (see our blog for more information);
  • regarding pensions, a reduction in the money purchase annual allowance from £10,000 to £4,000 from April 2017;
  • significant changes to the rules on non-domiciles (non doms), concerning the classification of non doms and their treatment for income tax and capital gains tax purposes;
  • changes to inheritance tax treatment on overseas entities that have value attributed to residential property in the UK;
  • Making Tax Digital reporting and record keeping for VAT;
  • updates to the rules around corporate interest restrictions, to combat large companies using excessive interest payments to reduce their tax;
  • increased flexibility in the use of corporation tax loss relief, allowing carried forward losses to be offset against the company’s total profits in a later period, or in the form of group relief;
  • changes to prevent arrangements designed for the purpose of avoiding tax.

One of the major areas of change, as noted by John Cullinane, CIOT Tax Policy Director, are the amendments ‘to the regime for non-UK domiciles’. More specifically these changes include:

  • a reduction in the threshold for non-UK domicile status such that non doms that have lived in the UK for 15 out of the last 20 years will be deemed to be UK domicile for income and capital gains tax purposes (down from 17 out of 20) from April 2017;
  • individuals that are born in the UK, with a UK domicile of origin, having returned to the UK after acquiring a domicile of choice elsewhere, will be deemed to be UK domicile on their return, from April 2017;

Further details may be found here.

Additional provisions will allow a two year period to permit non doms to rearrange their mixed overseas funds, in order to allow them to bring money into the UK, without being subject to the rules that would normally apply for remittance basis purposes.

The Bill, if passed in its current form, will represent the second largest Finance Act in history at 674 pages, beaten only by the Finance Act 2012 at over 700 pages. The CIOT has stated that ‘with a Bill this long the scrutiny process will be particularly important’.

If you have any queries regarding the proposed changes, and how they might affect you or your business, please contact a member of our team for a no-obligation chat.

Contact us today to discuss your tax requirements.
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