If a person is treated as UK domiciled under these provisions but is non-domiciled under general law, his children will remain non-doms for tax purposes. However it seems likely that, if the children are born and brought up here, they will become taxable on worldwide income and gains on their 15th birthday.
CBW Tax reaction:
There may be scope here for a person to gift assets to his infant children before 6 April 2017. The problem of course is that no one wants to give millions of pounds to a five-year old. If the parent has been here for less than 17 years, a gift into an overseas trust for the benefit of the children would work. If the trust has sufficient flexibility, it might be possible to pass assets overseas from generation to generation so that no one becomes entitled to income or capital gains after they have been resident here for 15 years.
If the parent has been here for more than 17 years, a gift into trust is unattractive as it will attract IHT. A sale to a trust with the purchase price being outstanding would be feasible though.
Another possibility is to use a bare trust under which the legal title, and therefore effective control, is put into the hands of an adult with the child having beneficial ownership.
The change will also apply for IHT.
For further information, please contact Robert Maas as below.