Published on: 17th September 2016

Inheritance Tax rules changed for non-doms by Government

The treasury made an announcement recently that could put an end to a permanent non-dom status for tax purposes.

They forwarded a consultation which suggests that thousands of non-dom property owners could face major Inheritance Tax (IHT) bills as part of its campaign against offshore companies owning properties in the UK. This follows our previous year's summer budget which declared plans to change the tax regime for people who have a foreign domicile.

Right now, UK born individuals are liable to pay IHT on their worldwide property, whereas non-doms are only liable to pay IHT on their property that is situated in the UK. But the Government wants this exemption to be removed so that people can't avoid IHT by putting property into an offshore company anymore.

The practice of "enveloping" is where individuals hold UK residential properties through an overseas company - the consultation states that it wants to stop this from happening. In effect it will bring all UK residential property within the scope of IHT, regardless of how the property is owned (for example through a business).

These changes could affect a lot of non-dom property owners in the UK. If this consultation is a success, the changes will be put into place in April 2017.

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