Finance Act 2017 and non-UK domiciliaries

The tax changes affecting non-UK domiciliaries (non-doms), which were dropped from Finance Act 2017 in April, will be in the autumn Finance (No 2) Bill 2017. The government published the relevant clauses in draft on 13 July.


In June, while we were still awaiting the next Finance Bill, ICAEW wrote to HMRC and HM Treasury, setting out problems with the domicile clauses as they appeared in the first Finance Bill 2017. This has been published as ICAEW REP 76/17


We explain below the progress of this legislation.


First Finance Bill 2017

After a couple of years of consultation and drafting, the majority of the clauses relating to the tax changes affecting non-doms were included in the draft Finance Bill 2017 in March; some changes were deferred to Finance Bill 2018. We highlighted some of the problems with the draft legislation in ICAEW REP 50/17; this is a very complex area and the difficulties in drafting the legislation cannot be underestimated.


Following the announcement of the general election, all of the non-dom clauses were dropped and do not appear in Finance Act 2017. We saw this as an opportunity for HMRC to reflect on the draft clauses and perhaps revise them, and to this end we sent an email to the team responsible at HMRC and HM Treasury. The text of the email is published in ICAEW REP 76/17


Our main points were in connection with the cleansing provisions, loans and tainting, and the provisions charging IHT on UK residential property even if it is owned via offshore structures.


Second Finance Bill 2017

As the second Finance Bill of 2017 has been delayed until the autumn it is to be hoped that time is taken to reflect on the drafts produced to date.


The statement from the Financial Secretary to the Treasury, announcing the autumn Finance Bill, makes the following points which are relevant to the non-dom clauses:


  • Where policies have been announced as applying from the start of the 2017/18 tax year or other point before the introduction of the forthcoming Finance Bill, there is no change of policy and these dates of application will be retained. Those affected by the provisions should continue to assume that they will apply as originally announced.
  • In the case of some provisions that will apply from a time before the Bill is introduced, technical adjustments and additions to the versions contained in the March Bill will be made on introduction to ensure that they function as intended. To maximise certainty about the exact provisions that will apply, the government is publishing updated draft provisions.


The updated draft provisions are now available: Deemed domicile: Income Tax and Capital Gains Tax – updated legislation


The legislation includes the provisions dropped in March 2017 and the provisions that were held over for Finance Bill 2018. Most of the changes are to the provisions on trust protections and on cleansing mixed funds. HMRC has advised us that “These are relatively minor amendments which will provide greater clarity and ensure the legislation works as intended”. Initial review of the amendments indicates that the vast majority of our requests for changes have not been actioned, meaning our various representations are still valid. For those readers who want to follow the changes through the draft legislation, a table of the changes is posted below.


We will comment on the draft legislation in due course.

Finance Bill non-dom reforms - changes to clauses July 2017.pdf