Summer Finance Bill announced

In a Queen’s Speech which was somewhat light in detail, there was an announcement this week that a Finance Bill will be put before Parliament this Summer.

Readers will recall that following the announcement of a snap General Election in May, the government rushed through a heavily slimmed down Finance Act.  As a result, many important measures, notably changes to the system of taxation for non-domiciled individuals, were dropped.

We are expecting the Summer Finance Bill to reintroduce these changes, although this is still to be confirmed.  Frustratingly, no timetable has been announced either, and neither do we know whether the rule changes will be backdated to 6 April 2017 (which is when they were originally scheduled to become effective).  However, on the basis that Parliament is scheduled to rise for the Summer recess on 20 July, a bill could be tabled in a matter of days.

 

Particular areas of interest include:

  1. Changes to the tax regime for non-domiciled individuals.  The original Finance Bill included a transitional relief for the cleansing of mixed funds.  Clarity is required on when the new rules will become effective, and how individuals who took action in April assuming the changes would be in force are affected.
  2. A relief was planned for individuals who become deemed domiciled on 6 April 2017 to allow rebasing of foreign situated capital assets to market value at 5 April 2017.  Non-doms may have sold assets in April, expecting to be able to claim the rebasing election.  We need to know whether this rebasing will apply, or be deferred.
  3. The ‘Substantial Shareholding Exemption’ (SSE rules) were due to become more ‘friendly’ in that various conditions attaching to the investing company were to be relaxed.

 

Our advice to clients is to refrain from taking action until the rules are clarified.  We will provide further updates via Tax Bites as soon as we know what is happening.

We hope that the Government responds to calls from the Chartered Institute of Taxation and the wider professional community for quick action, and to ensure that this type of situation – where tax changes are scheduled to become effective before Royal Assent is given – never happens again.  Perhaps now that Theresa May is in listening mode she will take note!

 

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