The most significant clause which appears to have been dropped is the changes to the Non UK Domiciled rules which would have been effective from 6 April 2017.
Those long-term residents of the UK who expected to be regarded as Deemed UK Domicile on 6 April 2017, will no longer be so!
Similarly, all transitional reliefs and provisions have also been dropped and so any discussions regarding Rebasing and Cleansing, may (and I say ‘may’ deliberately – see below) no longer be valid.
This will be a disappointing blow to those who had planned to use the rebasing and/or cleansing legislation in order to move money into the UK and/or sell assets at a reduced capital gain. However, it may also be a welcome relief to others who will no longer be regarded as deemed domicile in the UK.
There is much speculation about whether this is a permanent decision or merely a delay until after the general election. The expectation is that most, if not all, of the provisions dropped from the current Bill will return in a Bill after the election, regardless of who wins the election. In the course of the debate, the Financial Secretary to the Treasury stressed that there had been no policy change in respect of any of the clauses that had been cut from the Bill and that the Government would legislate for the remaining provisions at the earliest opportunity (assuming that it is re-elected).
What remains unclear is when, assuming that the provisions are brought back in a subsequent Bill, those ‘deferred’ provisions would then have effect from. It is possible that the subsequent Bill will keep the intended commencement dates (accepting an element of retrospection). It is also possible that there will be a delay in the start dates for some of these provisions and equally possible that the answer could be different for different provisions!
We now expect royal assent to be given to all outstanding Bills, including the Finance Bill, today (27th April 2017).
Other clauses which have been dropped include:
- The reduction in the nil rate band for dividends (due to be effective 6 April 2018)
- Making Tax Digital (due to be effective 6 April 2018 for landlords and businesses over the VAT registration threshold)