Offshore Mortgages Concession
Published / Last Updated on 15/04/2008
Offshore Mortgages Concession
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-UK domiciles. There were fears the plans would hit non-doms who have already taken out overseas mortgages.
The new rules mean non-UK domiciles will pay UK tax on unremitted foreign income used to service interest-only foreign mortgages secured on property in the UK. But the Budget notes estate the tax will not be applicable to existing loans until either the mortgage expires or 5 April 2028, whichever is earlier.
Our view
Non-UK domiciles have legitimately bought property in the UK with an offshore mortgage and to alter the basis of taxation for existing mortgage holders would have been grossly unfair.
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