.png)
.png)
Today’s autumn statement was a mixed bag for non-domestic taxpayers in the UK, experts have suggested, with the Chartered Institute of Taxation (CIOT) praising the announcement that there will be no changes to rules governing a non-residents’ entitlement to the UK personal allowance.
The government had proposed that a restriction should be introduced using an ‘economic connections test’ – but it will now not come into effect before April 2017, following a detailed consultation.
Today’s autumn statement was a mixed bag for non-domestic taxpayers in the UK, experts have suggested, with the Chartered Institute of Taxation (CIOT) praising the announcement that there will be no changes to rules governing a non-residents’ entitlement to the UK personal allowance.
The government had proposed that a restriction should be introduced using an ‘economic connections test’ – but it will now not come into effect before April 2017, following a detailed consultation.
“This is good news,” said Jon Preshaw, chairman of the CIOT’s management of taxes sub-committee. “We were concerned that the changes proposed would make the tax system unduly complicated and place additional burdens on employers.
“We were particularly worried about the suggestion that employers should be required to adjudicate on their employees’ entitlement to the personal allowance by asking them to declare their residence status,” Preshaw added, saying the CIOT was “pleased that the government has listened to our views, and those of others, and decided not to take the proposals further without more consultation”.
Less enthusiasm was given by tax professionals to changes to the remittance charge for non-domiciled taxpayers. The chancellor, George Osborne, this afternoon unveiled a new band system that will see a £90,000 annual fee for individuals who have been based in the UK for 17 of the past 20 years. Those who have been resident for 12 of the 14 years will pay £50,000.
Roy Maugham, tax partner at accountants UHY Hacker Young, said the plan was the “latest in a line of initiatives that have hit wealthy international businesspeople living in the UK.”
He warned, “We could see individuals leaving for good [after having] made a significant contribution to the UK economy over the years, often investing heavily or helping to build British businesses. That loss would outweigh the benefits of the additional £120m the new arrangement is expected to bring in its first year.”
Maugham also criticised proposals to lock non-doms into paying on the remittance basis for a minimum of three years. “It would have a particularly unfortunate impact for those whose overseas income is genuinely volatile, which would not be unusual for an entrepreneur. In some circumstances, they could end up paying more in tax than they had in overseas income.”
Jennifer McNally of accountants Blick Rothenberg agreed, saying, “The chancellor’s proposed consultation… provides more uncertainty, rather than the certainty promised earlier.”
Her colleague Frank Nash added, “Non-domiciliaries living in the UK are already in the top 50% of income tax payers. The chancellor needs to tread carefully in the detail of the changes he proposes.”
