TaxPersonal TaxUK and US poised to sign tax pact

UK and US poised to sign tax pact

Chancellor Gordon Brown will meet with US Treasury secretary Paul O'Neill tomorrow to introduce a new double taxation treaty that is expected to benefit companies and employees on both sides of the pond.

The new pact, the first on double-taxation relief since 1975, will reduce the risk that UK citizens working in the US, and US citizens employed by British companies pay tax to both the Inland Revenue and the US’s IRS.

Among the improvements will be reform of the pension taxation rules, which will make it easier for UK citizens working in the US to receive relief on their pension schemes, with similar benefits for Americans working in Britain.

British companies employ currently one million Americans and this reform is expected to increase the mobility of workers between the two countries.

Other changes to the pact include an exemption on capital gains from double taxation as well as the removal of withholding taxes on investment income.

A spokesperson for the Revenue said the new treaty represented a ‘milestone’ in the relationship between the two countries and would strengthen economic ties between them.

Links

More tinkering improves DTR rules

Double tax relief runs out of time

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