Autumn Statement 2014

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International (Individuals & Entities)

Individuals and entities they control who are not fully chargeable to UK tax are again the subject of attention.

The Remittance Basis Charge for non-UK domiciled individuals remains £30,000 annually for those who have been resident in the UK for seven out of the last nine years. Those who have been resident for 12 out of the last 14 years will pay an increased charge of £60,000 for 2015/16 and a new annual charge of £90,000 will apply to those who have been resident in the UK for 17 of the last 20 years.

A welcome development is confirmation that non-residents will continue to benefit from personal allowances, where domestic law or a double tax treaty allows.

The Annual Tax on Enveloped Dwellings (ATED) currently applies to residential properties worth more than £2m which are owned through certain types of ‘non-natural persons’. The amount of the charge depends on the value of the property. Reductions to the threshold from £2 million to £1 million from 1 April 2015, and to £500,000 from 1 April 2016, had already been announced. The charges on properties worth more than £2 million are to be increased by 50% above inflation for the year 2015/16.

The Government had previously announced it would extend capital gains tax to disposals of UK residential property by non-UK residents from 6 April 2015.

Draft legislation will not be published until the Finance Bill 2015, but while the scope of the proposal is now somewhat clearer it is still subject to consultation on some points of detail. Nonetheless it is clear that the charge will apply to all non-UK resident persons other than those liable to ATED (who are already subject to tax on such gains). There are certain exemptions though for institutional investors and other entities that can demonstrate they are not “narrowly controlled” as well as for developers and others who account for their UK residential property as trading stock.

There will be an opportunity to rebase holdings so that only that element of any gain arising after 5 April 2015 remains chargeable.

There will be no requirement for tax to be withheld at source but a return of tax payable, as well as payment, will be required within thirty days of the disposal.

The application of the rules on principal private residence (PPR) relief has also been clarified. The existing arrangement allowing a taxpayer to nominate his PPR will remain but the relief will not be available for properties in a jurisdiction where the individual is not tax-resident. This will apply to disposals of both UK and non-UK residential properties regardless of the vendor’s residence. Broadly, a property will not be capable of being treated as an individual’s PPR for a tax year unless they have resided in the property for at least 90 days in that year. For non-residents, nominations to treat a residence as their PPR are to be made at the time of disposal.

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