Long term UK resident non-doms to be deemed UK domiciled

The UK Government has released draft legislation giving effect to its proposal to deem the domicile status of certain UK resident non-doms to be UK domiciled, regardless of their actual domicile.

The changes only apply to non-doms who, on or after 6 April 2017, have been tax resident in the UK for 15 out of the previous 20 tax years.   For example, in tax year 2017/2018 beginning on 6 April 2017, the changes would only affect any individual who has been resident in the UK continuously since UK tax year 2002/2003 or earlier.  These non-doms will be deemed to be UK domiciled.

Becoming deemed UK domiciled has a number of implications for UK taxes.

‘Toxic’ survivorship clauses: does your Will contain one?

Do you have a survivorship clause in your Will?  Chances are you do, if you leave assets to someone outright in your Will.  The mischief that these clauses are designed to avoid is this.  If A gives a gift to B in his Will and B dies the day after A, B’s estate will get the gift and it will be B’s Will that decides where A’s gift ends up.  However, in these circumstances, A may have wanted someone else to get the gift instead (A may not like B’s choice of heirs!).  Survivorship clauses are meant to solve this problem.  They also prevent the delay associated with the same money being administered through two separate estates and can reduce the total Inheritance Tax bill on both estates. 

Survivorship clauses introduce a condition of survivorship to an otherwise outright gift in a Will – for example: ‘I give £100,000 to my nephew if he survives my death by 28 days’.  Sometimes a catch-all survivorship clause is included instead; for example: ‘My estate is to be divided as if any person who dies within 28 days of my death had predeceased me’.  However, this exact catch-all phrase unfortunately caught out the estates of the late Mr and Mrs Winson, as recently decided in the case of Jump v Lister [2016] EWHC 2160 (Ch).