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BREXIT Update
On 23rd June the UK voted to leave the European Union (‘EU’).
Since the vote itself the political uncertainty in the UK has intensified and the country now finds itself with a new prime minister and may well also have a new leader of the Opposition.
Although we are only just entering the post-referendum landscape and whilst it may take months, if not years, for the UK to settle its relationship with the rest of the EU we thought it would be helpful to comment on how the referendum result and the UK’s likely exit from the EU might impact on families with international interests.
The taxation of non-domiciled individuals
In July 2015 the Government announced significant changes to the taxation of UK resident non-domiciliaries and to structures which hold residential property in each case to take effect from 6th April 2017.
Since the announcement in 2015 there has been some consultation on the detail of the Government’s proposals but properly fleshed out detail on some of them is still awaited. It was also hinted at the time that the Government might introduce transitional provisions to ease the tax cost for those individuals who wished to dismantle existing structures which hold UK residential property.
Naturally, families have been waiting to find out further details of the Government’s proposals before taking any action and the prolonged silence from the Treasury/HMRC has not been helpful.
Prior to the referendum itself, representatives of HMRC suggested that the referendum was a significant factor behind their delay but were also very clear the proposed changes were going to take effect on 6th April 2017 even though the lack of further information leaves families with little time in which to make their plans.
Now that the referendum has taken place the Government will hopefully publish further details of their proposals without much further delay.
In any event families should expect a fairly tight timetable in which to formulate their plans for addressing forthcoming changes and in particular deciding what, if anything, to do about existing structures holding UK residential property.
Succession to assets in the Eurozone
Many will be aware that in August 2015 the EU succession regulation, often referred to as “Brussels IV” came into effect. The succession regulation (from which the UK, Ireland and Denmark opted out) attempts to harmonise the private international law rules which determine which jurisdiction’s laws govern matters of succession.
One of the aspects of the succession regulation is that it allows an individual to elect that the law of his or her nationality shall govern succession to assets in the “Eurozone” (the EU minus the UK, Ireland and Denmark).
The likely departure of the UK from the EU will potentially complicate the succession analysis for assets owned by UK nationals which are located in the “Eurozone”.
Consequently, there is a greater advantage than there was before for UK nationals who own assets in the “Eurozone” to make Wills that apply English law, as the law of their nationality, to govern succession to those assets.
Immigration
It goes without saying that the Brexit vote has an impact on immigration and the free movement of people. However, the extent to which these are affected is as yet unclear and much will depend upon the outcome of the Government’s negotiation of the UK’s exit from the EU and the new model adopted following that.
We have a close relationship with a highly experienced firm of immigration lawyers who have set up a dedicated team to deal with EU enquiries. Our contacts there stress that clients should take action now in order to regularise their immigration status and we would be happy to refer clients on personally if necessary
