REFORMS TO THE tax rules regarding investment from non-domiciled individuals into UK business are generous and will make the UK more attractive, according to tax advisors.
Chancellor George Osborne (pictured) announced in the Budget that he would he would remove UK tax liabilities for non-domiciled individuals (non-doms) on overseas income and capital gains remitted to the UK for the purpose of commercial investment in UK business.
The government today published its consultation on the details of the reform. Under the new rules, individuals will be allowed tax-free remittance for investment in businesses that are “carrying out trading activity” or “undertaking the development or letting of commercial property”.
The consultation says the government “recognises that non-domiciles often want to invest in commercial property” and its conclusion “will broaden the appeal of the incentive”. There will be certain exclusions for holding and letting residential property as some people could abuse this through using it to buy property in which they live, the consultation states. Also excluded is the leasing if “tangible moveable property” such as yachts, cars, furniture and pictures and the provision of personal services.
There will be no limit on investment through offshore trusts and vehicles or in businesses that are not UK resident. There will also be no upper or lower limit on the size of the investment.
It specifies three anti-avoidance measures: capital gains or overseas income to be taken out of the UK once the investment is disposed of; only arm’s-length payments or loans being given to the individual; and a prevention of individuals buying pre-existing businesses from themselves.
David Kilshaw, chair of private client at KPMG, said: “Making the UK an attractive place for non-doms to invest should increase investment in UK business. The proposal to allow foreign income to be invested in UK businesses without the current barrier of a charge to tax is a positive development.
Mike Warburton, tax director at Grant Thornton, said the measures were “generous in the way they allow investment into the UK”. He said they “might even encourage newspaper moguls to put money back into the newspapers”.
Matt Coward, partner at Price Bailey, said: “Remember the mood music in late 2007 and early 2008 for non domiciles and their advisers – of how the UK was not a welcoming place for them any longer? This time the headlines will be very different and this sets the tone of the consultation. It’s very welcome indeed.”
Crowe Clark Whitehill , the top 20 accountancy firm, has announced the promotion of Chris Mould to partner
The latest opinions from Accountancy Age on Making Tax Digital, and outline plans to evolve the UK's corporate governance regime
Five million taxpayers are ow using digital personal tax accounts (PTA) as part of the making tax digital strategy, HMRC said
UK-based non-doms have paid ten times more tax than the average taxpayer, raising concerns over the Brexit impact on non-dom contributions and therefore, the economy