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13 Mar 2008
A desperate bid has been made by the government to prevent a non-dom stampede from Britain’s shores, as small businesses were denied any further capital gains tax reliefs.
The Treasury went to the lengths of adding a 16 page letter from an American law firm which said that it expected the £30,000 non-dom levy could be offset against US federal tax after jittery Americans threatened to leave the UK.
Ernst & Young’s private client partner Andrew Tailby-Faulkes said that despite the positive noises, an element of doubt still lingered.
‘[The Treasury] is not saying it’s a done deal,’ said Tailby-Faulkes. ‘It seems like there has been a lot of behind-the-scenes negotiations going on with the Internal Revenue Service.’
Tailby-Faulkes described the non-dom changes as ‘extraordinary’. ‘We and many other stakeholders called for a delay in changing the rules because they are so complicated. We could have benefited from further consultation and refinement.’
Lenka Hennessy, tax director at Grant Thornton, added: ‘The chancellor has back-pedalled on the non-dom rules.’
By contrast, those expecting further CGT concessions were left out in the cold. A flat rate of 18% with a lifetime entrepreneurs’ relief of 10% on the first £1m of business gains will still go ahead, but it will still only apply to those with a 5% stake in the company.
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non dom policy
what wud be the impact on a non dom person having an overseas income of say £ 100K and on on 40% tax bracket in UK if he were to declare non dom status in year 1 and pay £ 30K levy but the following year he brings the £ 100K into UK. would he then be taxed £40K (being on 40% tax) less £ 30K paid as non dom levy the previous year, net effect £ 10K.
Posted by: varun malhotra, 16 Mar 2008 | 00:00