Expat Investing - ‘Non-Dom’ Reforms For British
2017 UK Resident Non-Dom Tax
The arena of expat investing is nothing if not varied! The febrile international markets, coupled with
convoluting legislation around the world as governments try and tighten their grip on the world’s money means that
there is always something new going on. This is particularly the case right now if you have British citizenship.
The uncertain climate surrounding Brexit, coupled with a general
move to stop money flowing out of the UK has seen a few ‘non-dom’ reforms fly through the House Of Commons - with the result that ‘Non-Dom’
Brits (i.e. British expats) will now find their offshore investment landscape looking rather different.
|New 'non-dom' tax reform bill, that was put
on hold in April 2017, could make significant tax status
changes for the British expats who are officially not domiciled in the UK. (photo by
It’s worth noting that the recent and unexpected General Election in the UK has left the Finance Bill containing
these changes rather up in the air. Changes meant to be implemented in April 2017 have been put on hold during
campaigning, and are currently delayed. Whether they go through at all, and whether or not what we eventually get
is the same as what was initially proposed, remains to be seen, but it’s worth learning about them nonetheless.
Here’s a quick primer:
‘Non-Dom’ Tax Rules For UK Expats
British expats looking to secure their finances by buying property abroad (and registering themselves as living
there) will soon be hit by ‘Non-Dom’ taxes. This isn’t to say that buying property abroad is no longer a good move
if you’re a British resident - land and property is nearly always a sound investment. However, it may be wise to
look for ways to secure those investments, and make them work to offset the tax. Here’s how it’s going to work:
- Permanent Non-Dom status is to be abolished for any British citizen who has spent 15 of the past 20
years in the UK, regardless of any properties they own and/or are registered as living in abroad.
- Non-Dom status will be removed for anyone registered living abroad who is, to all intents and
purposes, dwelling and working in the UK.
What this means, essentially, is that a British expat can no longer avoid being taxed on money they earn in the
UK by registering themselves as non-resident. So, while property abroad remains
a sound investment from a basic financial point of view, it’s harder to use such properties as ‘tax havens’. Not
impossible, but harder. It’s also likely that tax rules concerning property in the UK will tighten around British
expat properties held abroad, insofar as the British government can do this without falling afoul of local
legislation. It’s probably worth looking carefully into said local legislation, therefore, if you’re a British
expat looking for property abroad.
It’s also worth noting that the British government is bringing British properties held by foreign companies
under its taxation umbrella, so those who hold property in Britain may wish to have a look at this.
British Expats No Longer Exempt From Inheritance
As it stands, British citizens registered as Non-Dom can own UK properties via an offshore company, trust, or
other structure are not liable to pay inheritance tax on that property. However, the proposed Finance Bill has
effectively closed this loophole. When the proposals come into effect, British citizens will be liable to pay both
Inheritance Tax and the new Annual Tax On Enveloped Dwellings (ATED), whether these are held offshore or not.
Legislation being brought in will allow UK authorities to ‘look through’ any company shares or structure to the
expat beneath, and tax accordingly. Capital gains charges may also apply to those who want to unravel or obfuscate
This does not mean, of course, that it is going to be impossible for UK expats to avoid inheritance
tax on UK assets and properties. However, some restructuring may be required in order to do so. British Non-Doms
will also have to be much more careful about preserving their Non-Dom status if they wish other financial perks
(income tax remittances, for example) to remain in place. Of course, the state of affairs in Britain is anything
but clear at the moment, so whether any of this comes to pass remains to be seen. However, for those concerned
about this, the General Election has given a window of opportunity for people to get their houses in order, and
set a taxation gameplan in place.