In a u-turn, the Government has announced that the plans for non-UK domiciles who invest in UK property through an overseas corporate structure to pay UK inheritance tax on death are now on hold
From 6 April 2017, non-UK doms would have had to have paid UK inheritance tax on their properties, but this – and a number of significant amendments to the Finance Bill made on Tuesday by the UK Government – Have put paid to this for the time being.
Therefore, those who have invested in the UK property market through such overseas structures could still benefit from the property being exempt from UK IHT on their death. With UK IHT at a rate of 40% this will be of interest to many investors. However, the Government has made it clear that all clauses which were dropped on Tuesday will be included in a subsequent Finance Bill, soon after the General Election, provided the Conservative Government is re-elected.
David Denton, head of technical sales for Old Mutual Wealth, comments: “The announcement that certain clauses have been cherry picked for exclusion from the Finance Bill has come as a surprise, but it is clear the Government intends to include them in a third Finance Bill following the General Election, provided they are re-elected! It would be prudent for investors to assume these changes will come into force in the near future, and will be effective from the 6 April still. Therefore, it remains important that investors have plans in place to enable beneficiaries to pay any potential future inheritance tax bill on death.”
The UK Government announce / consult on a number of policy changes, which are included in the Finance Bill. The Finance Bill needs approval from Parliament before it becomes legislation. The amendments announced by the Government are as a result of the forthcoming General Election and the lack of time available to get all the proposed changes through Parliament in time. As a result a number of policy clauses were removed from the Finance Bill but are expected to be included in a third Finance Bill after the General Election.
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