Taxing the UK’s wealthy: A timeline of a changing landscape
4 Aug 15
Law firm Edwin Coe maps out the upcoming changes to the taxation of high net worth individuals in the UK, as announced in the last two Budgets.
While many commentators have focused their sympathies on those reliant on benefits following last month’s Summer Budget, law firm Edwin Coe argues that it could also be high-net-worth individuals who feel the sting of an all-blue leadership.
“Pity the rich, how tough it must be for them to pay more for earning more,” many will now say sarcastically, but it is worth pointing out that there are a wealth of upcoming changes which will undoubtedly prove taxing for HNWIs, puns fully intended.
For example, the next two years will see the Liechtenstein Disclosure Facility close to make way for a tougher amnesty, non-doms lose their status after 15 years, and the introduction of restrictions on the annual pension relief allowance for high earners.
Indeed, as Kieron Clement-Smith, associate, tax services at Edwin Coe, puts it, UK residents will be affected if any of the following apply:
- They are non-UK domiciled and have been resident in the UK for a number of years
- They hold UK residential property via an offshore structure
- They let UK residential property
- They receive substantial dividend income
- They are higher earners who make substantial pension contributions
- They have undisclosed tax liabilities
“Significant changes were announced in the Summer Budget 2015 that will have a major impact on the taxation of high-net-worth individuals and non-UK domiciled taxpayers,” he says.
“From 6 April 2017 non-dom taxpayers who have been tax resident in the UK for 15 of the previous 20 tax years, will in their 16th year of UK residence be unable to benefit from the remittance basis of taxation and will become deemed domiciled in the UK. They will suffer tax on their worldwide income and gains, and will be exposed to inheritance tax on their worldwide assets. “
“It has been proposed that all UK residential property will be subject to UK inheritance tax even when held via an offshore structure. This could have serious repercussions for non-doms who have used offshore structuring in the past, perhaps using offshore companies and/or excluded property trusts.”
So, regardless of whether one’s stance favours the wealthy or not, it cannot be denied that the tax landscape is changing – arguably favouring middle earners, an argument for another day.
Click through to see Edwin Coe’s timeline of HNWI tax changes proposed in the most recent Budget, along with those which had been announced previously.
Tags: Budget | HMRC | UK Adviser
