Following the substantial reduction of the Finance (No. 2) Bill 2017 ahead of the June election, the Government has now published a new Finance Bill 2017 and has said that it intends to introduce it "as soon as possible after the summer recess". The effect of the new Bill will be to implement policies that were previously dropped from the Finance (No. 2) Bill 2017, including: The extension of inheritance tax to UK residential property held through offshore structures by non-UK domiciled taxpayers and trusts. The abolition of permanent non-dom status for individuals who have lived in Britain for at least 15 out of the preceding 20 years. A reduction in the money purchase annual allowance from £10,000 to £4,000 for individua...

The case of M. F. Fowler v HMRC concerns the application of UK tax law, and how this interacts with international double tax arrangements. In 2016, the First-Tier tribunal ruled in the taxpayer's favour (a review of the initial case may be found here) and held that the undefined terms in the UK-South Africa double tax treaty must be interpreted according to domestic law. On this basis Mr Fowler's income was "trading income" and therefore not chargeable to UK tax. In this case the Upper Tribunal overturned the previous decision on appeal and held that the income was in fact to be treated as employment income, and therefore a liability to UK tax should arise. The Facts Mr Fowler, a South African resident, worked as a diver in ...

Finance Bill 2017 has introduced a number of changes which will affect the Inheritance Tax (IHT) exposure of non-UK domiciled taxpayers who hold UK residential property though offshore structures. As a part of these changes, new rules will ‘see through’ to residential property held via offshore close companies and will be included in the non-domiciled individual's estate for IHT purposes. Overview of Current Rules For non-domiciled taxpayers, IHT will normally only be charged on UK situs assets (i.e. assets in the UK). Property outside the UK is normally excluded from IHT where the individual beneficially entitled to it is domiciled outside the UK. Domicile is a common law concept and broadly refers to the country w...

Here is a summary of some of the changes announced by the Chancellor of the Exchequer in the Summer Budget, published on 8 July 2015. Income Tax It is the government's objective to raise the personal allowance to £12,500 and the point at which high rate tax applies to £50,000 by the end of Parliament. Therefore, someone working 30 hours a week on the minimum wage (aged 21 or over) will not pay tax. The government will achieve this by: Increasing the person allowance from £10,600 for 2015/16 to £11,000 for 2016/17, and £11,200 for 2017/18 Increasing the basic rate band from £31785 in 2015/16 to £32,000 for 2016/17, and £32,400 for 2017/18. There has been an increase in the tax-free "rent-a-room" income from £4,250 to £7,500 ...

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...