Private Clients - 17 Mar 2016
Buried in the documentation issued after the Chancellor’s Budget speech on 16 March 2016 was one welcome announcement on how capital gains arising on non-UK assets will be taxed from 6 April 2017. This announcement opened the door to a rebasing of such assets to their market value at 6 April 2017. Unfortunately, the brief statement of intent poses a number of questions which will remain unanswered until details of this policy are published on March 24.
A literal reading of yesterday’s announcement seems to have rebasing restricted to those individuals who become deemed domiciled on day one of the new regime. That would be an odd policy, so it is to be hoped that rebasing will actually apply to individuals becoming deemed domiciled on or after that date.
A further question is how gain attributable to the period when an individual was taxed on the remittance basis will be treated. So in the simplest example, a non-UK asset with an inbuilt economic gain is sold on 6 April 2017. Will rebasing as of that date mean that the slate is wiped completely clean, with no potential liability to UK capital gains tax? Alternatively, is the intention to still tax the pre-April 2017 element of gain on the remittance basis?
The announcement also indicated that there will be transitional provisions for offshore funds. Such a bland comment covers all sorts of potential outcomes. Further details of the government’s policy are due to be published next week, on 24 March 2016. Here at Frank Hirth, we think that in the meantime it is pointless to indulge in speculation. The key will be to understand that detail once it becomes available in order to know what planning opportunities there will be in 2016/17. We will issue a further news alert once we have seen that detail.
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