The UK’s 2017 Finance Bill was published on 5th December. This provides the draft legislation for many tax changes to take effect from April 2017. STM Group Plc highlights some of these changes as follows.
The Bill makes some significant changes to the operation and taxation of overseas pension schemes, including, for example, enabling HMRC to:
- • Extend from five to ten years the period in which UK tax charges can apply to payments out of funds in overseas pension schemes that contain pension funds or rights that have benefitted from UK tax relief.
- • Ensure that funds in a registered pension scheme based outside the UK are subject to UK tax consistent with the tax treatment of a UK-based registered pension scheme.
- • Tax the full foreign pension of UK residents, instead of 90%.
- • Tax foreign pension lump sums paid to UK residents that are not already liable to UK tax.
- • Close specialist “section 615 schemes” to new pension saving if individuals wish to continue to be able to receive relief from tax in respect of annuity payments from those schemes.
- • Have new powers to make Regulations specifying how information and evidence should be provided and that a pension transferred from a relevant non-UK scheme out of funds that have benefitted from UK tax relief to another relevant non-UK scheme or a registered pension scheme will be treated as the original pension.
Non-UK domiciliaries (“non-dom”)
- • Despite the Brexit vote, it has been confirmed that the UK’s non-dom changes will be implemented in April 2017, previously there was speculation that they would be delayed.
- • The permanency of non-dom status will end. From April, non-doms will be deemed UK dom for all UK tax purposes if they have been UK resident for 15 of the past 20 years, or if they were born in the UK with a UK domicile of origin and are UK resident.
- • Protected Trusts can still be beneficial.
- • Rebasing election will be available for overseas assets owned personally for those who become deemed domiciled on 6 April 2017.
- • A two year grace period will be available to unravel overseas mixed bank accounts.
- • Generally, all UK residential property will fall within the scope of IHT, regardless of the ownership.
Life Insurance: Personalised Portfolio Bonds (“PPBs”)
- • The Bill contains a provision to allow the Government to amend the list of life insurance “permitted assets”, by regulation. Where only these assets are selected a policy should not be regarded as a PPB. This list has not been materially updated since 1999 and this change is welcome because it provides a wider range of choice within which policies may invest.