Trusts

Trusts established by non-doms who later become 'deemed dom' for IHT years of non-UK residence (rather than four) before that election will be revoked. At present there are no transitional provisions to prevent this extended period applying in cases where an election has already been made. Where a trust is established by a non-domiciled settlor (who has a non-UK domicile of origin), any non-UK situs assets held within that trust will remain excluded property for IHT purposes even if the settlor later becomes 'deemed dom' under the '15 out of 20 year' rule (the 'long term residence' provision).

UK residential property held via an offshore structure

There have been no further announcements as yet regarding the changes to IHT for UK residential property held via offshore structures. In particular, it is still not yet known whether any transitional provisions will be introduced which may allow existing structures to be unwound with a reduced tax cost. These changes will be the subject of a separate consultation and we understand that this is unlikely to be published until 2016. However, the same level of protection is not offered for trusts established by Returning Doms. For these trusts, non-UK situs assets will no longer be excluded property (and therefore may be exposed to UK IHT on 10 year anniversaries and in relation to exit charges) if the settlor is UK resident and deemed domiciled at the relevant time. In practice, this will require trustees to retain detailed records of their assets and also the residence and domicile status of the settlor, in order to accurately report IHT charging events to HMRC and pay the correct amount of tax. This may prove challenging for the trustees of some long established settlements. Taxpayers should therefore review their structures, so de-enveloping is still likely to be the right solution in many cases, but not press 'go' until we have further clarity. These changes emphasise the need to establish a taxpayer's domicile under general law will remain important under the new regime. It is perhaps unfortunate that we need detailed legislation on this point given that many Returning Doms will never have lost their domicile under the general law. BACK UK domicile spousal election Where an individual has made a spousal election to be treated as UK domiciled for IHT purposes, from 6 April 2017 there will need to be six successive tax

• Changes to the IHT rules for non-doms
• Changes to the IHT rules for non-doms - Trusts & UK residential property held via an offshore structure
• Changes to the IHT rules for non-doms - Loan collateral

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