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Foreign nationals should consider protecting their assets against any possible change to UK domicile rules

29/10/2014

Anyone living in the UK who is currently deemed ‘non UK domiciled’ for tax purposes should consider taking steps to protect their worldwide assets. Potential changes to the domicile rules could mean more foreign nationals becoming deemed UK domiciled and their worldwide assets becoming liable to UK inheritance tax (IHT) on their death.

It has been widely speculated for some time that the deemed domicile rules for foreign nationals living in the UK could be changed. Speculation has heightened following HMRC’s recent focus on the subject of non-residents living in the UK, having recently issued a consultation paper restricting non-resident’s entitlement to the personal allowance. This, combined with an election next year, might make wealthy foreigners an easy target to raise more taxes.

Currently the UK deemed domicile rule is based on the number of years someone is in the UK. If someone is in the UK for 17 out of the last 20 tax years then they will become deemed UK domiciled for IHT purposes, and all worldwide assets will be subject to UK IHT on their death. This calculation could be amended at any point in the future, and there is some speculation that the number of years could reduce from 17 down to a much lower figure, e.g. 7 years.

People who might be affected by a change in the deemed domicile rules should therefore consider taking steps now to protect their assets. There is a trust available to non-domiciled people living in the UK which enables them to protect their assets from IHT. The trust, called the ‘excluded property trust’, is already extremely popular in places like London, where there are high numbers of wealthy non UK domiciled individuals with considerable liquid assets to protect. To make the offshore assets simpler, more efficient to manage, and income and capital gain tax friendly, they could consider placing the assets inside an offshore bond before placing them inside the trust.

Rachael Griffin, financial planning expert, Old Mutual Wealth:

“The number of wealthy individuals who spend a considerable amount of time in this country is increasing. These individuals may be unaware of the deemed domicile rules. The speculation around the potential changes may create concern and uncertainty. Moving offshore assets into an excluded property trust now provides the non-domiciled individual with reassurance that their assets will be free of UK inheritance tax on their death”.

For more information contact

Sophie HeywoodOld Mutual Wealth02380 91677007834 499558sophie.heywood@omwealth.com

Notes to Editors:

Old Mutual Wealth is a leading wealth management business in the UK and internationally, helping to create prosperity for the generations of today and tomorrow.

Old Mutual Wealth oversees £131.3 billion in customer investments (as at 30 September 2017).

It has an adviser and customer offering spanning: Financial advice; investment platforms; multi-asset and single strategy investment solutions; and discretionary fund management.

The business is comprised of two segments: Wealth Platforms and Advice and Wealth Management.

Wealth Platforms includes the Old Mutual Wealth UK Platform; Old Mutual International, including AAM Advisory in Singapore; and the Old Mutual Wealth Heritage life assurance business.

Advice and Wealth Management encompasses the financial planning network, Intrinsic; Old Mutual Wealth Private Client Advisers; discretionary fund management business, Quilter Cheviot; and Old Mutual Wealth’s multi-asset investment solutions business.

Old Mutual Global Investors (‘OMGI’) is the asset management business of Old Mutual Wealth with £39.8bn funds under management (as at 30 September 2017). On the 19th December 2017, Old Mutual Wealth announced that it has agreed to sell its Single Strategy asset management business to the Single Strategy Management team and funds managed by TA Associates. The proposed transaction is subject to customary closing conditions, including regulatory approvals. 

Following managed separation from Old Mutual plc, Old Mutual Wealth will rebrand to Quilter plc. Each of the businesses within the Quilter Plc group will be rebranded over a two-year period, with the exception of Quilter Cheviot, which will retain its existing name.

Old Mutual Wealth is part of Old Mutual plc, a FTSE 100 group that provides life assurance, asset management, banking and general insurance. Old Mutual is trusted by more than 19.4 million (as at 31 December 2016) customers across the world and has a total of £212.3 billion of assets under management (as at 30 June 2017).

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