Impact on Portfolios for European Wealth Planners & Managers
(Summary overview of the final implementation of a regime first described in July 2015)
In March 2017 the old Conservative Government delivered its 2017 Finance Bill. Everyone knew that the new regime for UK RNDs would become effective on 6th April 2017. However, “a week is a long time in politics”. Yet, a ‘snap election’ called to deliver a greater Parliamentary majority meant that large tracts of the Finance Bill were dropped as time for Parliamentary scrutiny was reduced.
Now, just prior to the Summer recess of Parliament the new (and considerably weakened) Conservative Minority Government announce that the changes will form part of a 2017 Finance Bill (Mark II). Legislation will follow as soon as is possible.
Wealth planners may therefore look forward to a very active period as the winter nights draw-in. Crucially, the changes will be effective from 6th April 2017 as originally planned.
UK taxes upon portfolios managed in Switzerland, Luxembourg, Monaco, etc
Within a previous bulletin, issued in December 2016, we described the new regime and its impact upon portfolios managed by you. The key element was that after 15 years UK tax residence the ‘Remittance Basis’ of taxation would be unavailable. Those deemed as UK domiciles would be liable for all UK taxes on a global basis.
Interpreted as a sweetener to ease the impact of this major change the government announced;-
- A ‘One-Off’ free Capital Rebasing of Foreign Assets. Available for those becoming ‘Deemed-Domicile’ on 6th April 2017.
- A 2 year window to cleanse Mixed Funds. Available to all UK RNDs and with the aim of enabling, as tax efficiently as possible, the remittance of assets into the UK.
NB Each concession had a number of provisos.
Whilst not bringing positive news to those affected, the announcement gives clients and practitioners certainty (although we thought that in late March). Those considering wealth planning and especially those half-way through a wealth plan should now be able to move forward.
Life Insurance (as a shield against arising taxes)
Life policies are ‘Non-Income producing assets’ for all UK residents. They are free of tax and reporting obligations unless a ‘Chargeable Event’ occurs. Benefits for UK RNDs include
- Tax deferral on arising income, income gains & capital gains to a portfolio
- The protection of clean capital whilst invested in active risk assets
- Tax deferred withdrawals within the cumulative ‘5%’ allowance
Philip Tarplee is a Director of IIII Ltd. IIII Ltd is regulated by the UK Financial Conduct Authority
The content of this memorandum is solely intended for information purposes and is not to be construed as a solicitation or an offer to buy or sell any life assurance product. Neither is the information intended to constitute any form of legal, fiscal or investment advice and it should therefore not be used to replace appropriate professional advice obtained from a suitable qualified professional source. No representation or warranty, express or implied, is provided in relation to the accuracy, completeness or reliability of the information contained herein. IIII Ltd is not authorised to give financial advice.