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The Law Society - Conveyancing

13

Jan

2017

Tax Developments Anticipated in 2017

With the two year period for negotiating the UK’s exit from the EU due to start by the end of March 2017, and with the US poised for change under a new president, it is more difficult than usual to predict what will happen over the next twelve months. There will be two budgets in 2017 – a spring Budget on 8 March 2017 and one in the autumn. This may result in a larger number of surprise announcements from a government responding to wider political and economic pressures. The timetable for future Finance Bill legislation will take full effect in 2018.

Some confirmed developments in 2017 include:
  1. Changes to the taxation of non-UK domiciled individuals – New deemed domicile rules for income tax, capital gains tax and inheritance tax, whose aim is to prevent UK-resident individuals from benefiting from non-UK domiciled status indefinitely for UK tax purposes, will come into force on 6 April 2017;
  2. The Law Commission of England and Wales is due to publish its consultation paper on the law of wills in the spring of 2017;
  3. Supreme Court judgment in Ilott v Blue Cross and others  – this judgement relating to an award made to an estranged daughter for ‘reasonable provision’ from her late mother’s estate is one to watch this year, effectively overriding the gifts made to charities in her Will and bringing into question testamentary freedom;
  4. Disclosure of Tax Avoidance schemes (DOTAs) for IHT – following the publication of the draft Inheritance Tax Avoidance Schemes (Prescribed Descriptions of Arrangements) Regulations 2016 for consultation in April 2016, an announcement in December 2016 confirmed that the consultation responses would be published alongside the next iteration of the regulations, without giving a date for publication;
  5. Anti-Avoidance measures – expected in the Finance Bill 2017, amongst other measures to tackle tax avoidance using offshore structures.  It is anticipated that penalty-backed requirements for individuals to correct past offshore non-compliance may be introduced by 30 September 2018. This will underpin the worldwide disclosure facility that opened on 5 September 2016 and operate ahead of wider reporting of information under the Common Reporting Standard in 2018;
  6. HMRC’s Personal Tax Accounts (PTA) for individual taxpayers, allowing online interaction and potential replacement of the telephone system, with proposals to eventually replace annual tax returns for individuals and small business with digital tax returns; and
  7. An online trusts register is due to become a reality in the course of 2017 according to HMRC’s Trusts and Estates Newsletter for December 2016, allowing trustees and agents to register and update records online, replacing the paper submission on form 41G; and
  8. Following a Ministry of Justice consultation in September 2016 on the digitisation of probate applications, as a preliminary step the Non-Contentious Probate (Amendment) Rules 2016 (SI 2016/972) came into force on 1 November 2016 to allow personal applications to be made online. Future plans are to build on this initial online platform to allow the entire probate process to be managed online, from application to issue of a grant; as well as the a facility to complete inheritance tax returns and paying the tax due before probate can be granted.  No timetable has been given for this at present.

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