From the 6 April 2015, non-UK residents who dispose of a UK residential property may be liable to pay Capital Gains Tax (CGT) on any gains made on the disposal. The rules apply to individuals, members of partnerships, personal representatives of deceased estates and trustees.  Existing rules already bring non resident companies within the scope of capital gains tax on UK residential properties. Prior to this date, non UK-residents were not subject to UK capital gains tax on the disposal of assets. However, under the new rules non-UK residents will be taxed on the disposal of UK residential properties, harmonising the UK tax system with other jurisdictions that normally charge tax on the basis of where the asset is located. UK resident...

We present a list of some changes and points of interest for the tax year commencing 6 April 2015 The threshold of turnover for VAT registration is now £82,000 The main rate of corporation tax is now in line with the small company's rate, 20%.  Therefore the marginal rate of corporation tax is 20% The personal allowance for income tax is £10,600 Earnings above £8,060 per year will attract National Insurance Marriage Allowance comes into effect.  Spouse can transfer £1,060 of unused personal allowance to a basic rate taxpayer spouse Significant changes come into effect for pensions and their accessibility (subject to the terms of your pension scheme) The annual allowance for pension contributions remains at £40,000 The A...

The upper tier tribunal recently overturned the decision in the 2013 first tier tribunal case of Macklin v HMRC. The case involved the interpretation of the UK-US double tax treaty and in particular whether a pension scheme operated by the World Bank was "established in" the US. Whereas the first tier tribunal focused on exchange notes to the treaty which led them to conclude that the term "established in" referred to a pension scheme established under and in conformity with the relevant states tax legislation, the upper tier tribunal found that the term "established in" referred to the pension scheme's physical location. The case highlights the difficulties that can arise when applying double tax treaties to individual cases. How to In...

HMRC have recently changed their guidance in relation to the use of overseas funds as collateral for loans by remittance basis users. Those with existing arrangements in place should take tax advice now to see whether a disclosure is necessary and whether they can take action to come within transitional rules rather than risk a retrospective tax charge. The Change in HMRC's View The remittance basis allows non-UK domiciled taxpayers to elect to be taxed only on their UK source income and gains, plus foreign income and gains remitted to the UK (rather than their worldwide income and gains).  Depending on the amount of years the taxpayer has been UK resident, a remittance basis charge of £30,000/£50,000 may apply for using scheme. Pre...

A consultation paper was released on 28 March 2014 by HM Treasury entitled "Capital Gains Tax Charge on Non Residents".  The introduction of a charge on Non-residents in relation to residential accommodation was first mentioned in the 2013 Autumn Statement. We have summarised some key points and related commentary about the changes, which are proposals at present:- A Capital Gains Tax charge will apply to non-residents who realise a capital gain by disposing of a UK residential property from April 2015 onwards The charge will apply to most types of residential property, with no minimum threshold on value and whether or not the property is let Most "non-natural" non-residents will be subject to the charge; although the following...

A roundup of the latest news from the world of tax including highlights from the Autumn Statement 2013 and recent tax cases of interest. Click on the links below to view the full articles. Demolition of a home - Private Residence Relief and CGT The recent case of Paul Gibson v HMRC provides some interesting points in relation to capital gains tax and Private Residence Relief. Entrepreneur's Relief & Surplus Cash We have recently been involved in a recent case where assurance was sought from HMRC that surplus cash would not affect the company's trading status. New Reliefs for Indirect Employee Ownership  An outline of the new rules for qualifying "Employee Ownership Trusts". Changes to Capital Gains Tax - Autumn Statement 2...

The government has announced two important changes to capital gains tax (CGT) in the Autumn Statement 2013: 1. Private Residence Relief (PRR) Formerly known as Private Residence Relief or PPR, this relief exempts the gain arising on a sale of a persons only or main home. Broadly speaking, the exempt element of the gain is calculated by comparing the period of ownership to the period of occupation. However, there are a number of important extensions to the relief, known as periods of deemed occupation. Perhaps the most useful of these is that where a person has at any time lived in the property as their sole/main residence, the gain attributable to the last 36 months of ownership will automatically be exempt from CGT. From April 2014...

Key Lessons to be learnt The recent case of Stephen & Pauline Rumbelow v HMRC (TC03022) concerned the liability of the taxpayers to UK capital gains tax, during a period they claimed to be non UK resident. The case involves tax years prior to 2013/14 and as such involved an examination of the 'old' common law meaning of residence and cases such as Gaines-Cooper. This common law test was replaced by a statutory residence test in April 2013, therefore the Tribunal's analysis of the meaning of residence will be of limited use going forwards. However the case highlights some important messages to consider where tax advice is being put into practice: 1. Follow the advice carefully In this case the tribunal felt that the advice receive...

A roundup of the latest news from the world of tax including highlights from the Finance Act 2013 as well as recent tax cases of interest. Click on the links below to view the full articles. Lifting the Corporate Veil http://wp.me/p3gayI-4a The recent case of Prest v Petrodel Resources Ltd looks at the powers of divorce courts to pierce the corporate veil. Sale of Home but is it a Residence http://wp.me/p3gayI-40 The recent Moore case acts as a reminder that occupation by itself is not sufficient to make a house a 'residence' for capital gains tax purposes. Company Purchase of Own Shares - Transactions Void http://wp.me/p3gayI-3M The recent case of Russell Baker highlights the difficulties that arise where a company purchase of...

Historically a person’s UK residency status has been determined based on an analysis of the number of days spent in the UK together with factors based on case law.  HMRC's guidance was published in the booklet HMRC 6. However a new statutory residence test (SRT) was introduced from 6 April 2013, therefore a taxpayers residence status for the tax year 2013/14 onwards will be dictated by its new rules. An Overview of the Relevant Principles The basic rule is that, a person is UK resident in a tax year where either: 1. The 'automatic residence test' is met, or 2. The 'sufficient ties test' is met Where neither of the tests is met, the taxpayer is non UK resident for that year. The automatic residence test is met if the individual m...