Industry fears have been allayed with the Budget announcement that the crackdown on offshore mortgages will not be retrospective.
In last October’s pre-Budget report, the Government announced plans to strip the tax efficiency of overseas mortgages for non-doms.
There were fears the plans would hit non-doms who have already taken out overseas mortgages but the Budget clarified this would not be the case.
The new rules mean non-doms will pay UK tax on unremitted foreign income used to service interest-only foreign mortgages secured on property in the UKBut the Budget notes state the tax will not be applicable to existing loans until either the mortgage expires or April 5, 2028, whichever is earlier.
PKF national director of tax Lisa MacPherson says she welcomes the clarification but is disappointed that a clampdown will take place at all. She says: “It might not be a complete U-turn but it is a significant concession to non-UK domiciles that will make the changes announced in the PBR easier to swallow.”
“Non-domiciles have legitimately bought property this way and it would be manifestly unfair to alter the basis of taxation at this stage for existing mortgage holders.”
Anand Associates managing director Bhupinder Anand says: “I understand and sympathise with the Government wanting to create a level playing field as some might see this as a tax dodge. However, it is legitimate planning for non-doms with international wealth. Clients looking at coming in to the UK will be needing a review of their overseas income and holdings.”
PKF also welcomes the relaxations to the plans for taxation of offshore trusts as well as concessions allowing the £30,000 charge to be creditable against foreign tax.