The proposed reduction in corporation tax will do much to make the UK a ‘favoured destination’ for corporations
Geoff Melamet, founder and a CEO of HMSA, says government should work with the industry to make it attractive as a home for trusts not only for residents but also for non-residents.
The changes to non-dom taxation have good and bad implications. Irrespective of this, however, is that there is a period of consultation on this before the changes are implemented in 2017 so we cannot at this stage be sure how the die will finally fall.
At the moment it appears that non-doms who set up a trust before they are deemed domiciled will not be taxed on income and gains within the trust as long as the assets remain in the trust. IHT will also not apply to those assets. However, this assumes the assets do not comprise UK residential property. I think it must be a fair assumption that non-doms who intend to remain in the UK beyond the fifteen years will have structured their affairs correctly before they are deemed domiciled and hence retain some of the protection afforded to them. I believe that those who say this will ‘put non-doms off considering a relocation to the UK are seeing too much gloom and whilst it may have some impact, I think the UK will remain a favourable option for high net worth individuals to consider.
The implication on residential property, however, will be seen and felt in the property sector as ‘non-doms’ will structure their affairs in such a way as to mitigate IHT and will therefore look to other asset classes to do this.
The proposed reduction in corporation tax will do much to make the UK a ‘favoured destination’ for corporations. The government should therefore work with the industry to make it attractive as a home for trusts – not only for residents but also for non-residents – in a viable and transparent manner.