Are you non-domiciled and looking to manage your UK cash-flow, income, assets and investments? If you are, there are specific issues you’ll need to address in relation to your planning and compliance.
In this video Elizabeth Henson explains some of the complex rules surrounding non-domiciled individuals in the UK and some key tax issues which may affect those looking to invest their cash here.
Business investment relief has been brought in to help attract additional investment from non-UK funds. You can make loans to, or acquire newly issued shares in, qualifying UK companies. If you are looking to invest in a business, this is worth considering as it provides a route for investing in the UK without creating a taxable remittance. Potentially, this means a significant increase in the size of the investments you can make into the UK as offshore funds can be brought into the UK tax-free.
If you are not domiciled in the UK you are not normally subject to UK IHT on non UK situs assets. However care is required where you might be resident in the UK for a pre-longed period of time. The UK rules provide that where you have been resident in the UK for 17 out of the last 20 tax years, you will be regarded as deemed domiciled in the UK for inheritance tax purposes only. This will mean you are liable to UK inheritance tax (IHT) on your worldwide assets. If you are approaching the time when this might apply to you, it is worth thinking about how your non UK assets are owned as there are options that can reduce your family’s potential exposure. As ever it is worth considering your options well in advance and we would be happy to talk this through with you.
There have been changes to the taxation of UK residential property worth more than £2 million where this is held by ‘non-natural persons’ (broadly companies and partnerships with corporate partners). These changes have brought in a new annual charge from 1 April 2013 as well as capital gains tax (CGT) from 6 April 2013.
It is not uncommon for international investors to acquire property via a ‘non-natural’ person and as a result it may now be appropriate to reconsider any such structures to ensure they are fit for purpose. Equally future acquisitions should be undertaken with both the new rules and your not domiciled status in mind.
Please refer to the section on "Preserving your assets" for more detail regarding the impact of these changes.
As part of its ongoing initiative, HMRC is likely to expand its offshore agreements into other territories such as Singapore. So proactively reviewing your offshore affairs and ensuring tax compliance is highly advisable.
Major anti-avoidance legislation has been implemented in the form of the general anti-abuse rule (GAAR) which is designed to target aggressive tax planning. The GAAR is effective from mid-2013 and applies to (amongst other taxes) income tax, capital gains tax, inheritance tax, stamp duty land tax and the new annual residential property tax, and there is no clearance procedure, so we’d recommend you seek advice prior to initiating any future tax planning.
HMRC enquiries can be stressful and you could face penalties of up to 200% of the tax due on an incorrect return.
It’s never been more important to deal with an enquiry effectively and efficiently. Our investigations specialists can help you to manage the process. In particular: