HMRC issued a Policy Paper on 5th February with draft legislation to give effect to the proposed reforms of the taxation of non-UK domiciled individuals.

The changes, intended to take effect from 6th April 2017, will introduce two provisions to deem individuals to be domiciled in the UK for income tax and capital gains tax purposes. The first, Condition A, applies to anyone born in the UK with a UK domicile of origin, while they are UK resident. The second, Condition B, applies to anyone who has been resident in the UK for 15 out of the previous 20 tax years.

These changes will have a limited impact on employee shares schemes, even where operated by companies with internationally mobile employees. They will have potentially significant effects on individuals falling within the deeming provisions, however, where this results in income or gains, including those from employee share schemes, coming into tax where this would not previously been the case. Careful consideration will need to be given in good time to the consequences and mitigating steps where this is the case.

Pett Franklin, based in Birmingham, are experts in all aspects of employee share schemes, including share plans, growth shares, and share valuation. To find out how we can assist you and your business, call 0121 281 5798 or email enquiries@pettfranklin.com.