8 August 2012
The Finance Act 2012 contained provisions giving relief from tax under the remittance basis for non-UK domiciled taxpayers (‘non-doms’) who bring funds to the UK on or after 6 April 2012.
Income or gains will not be treated as remitted to the UK by a taxpayer if they use the money or other property concerned to make a ‘qualifying investment’ within 45 days of its being remitted to the UK.
The investment must, broadly, be in an unlisted trading company or property company (or a holding company for such companies). If the investment is disposed of, or ceases to qualify, relief will be withdrawn unless the funds are removed from the UK within 45 days.
The new relief provides a valuable incentive for investment in unlisted UK companies. However, it may also expose taxpayers to significant risks. If relief is given and subsequently withdrawn, the taxpayer is not simply restored to the position he would have been in if he had not claimed the relief in the first place; he will be taxed on remittances that he would not have considered making if the relief had not encouraged him to make the investment concerned. The relief will therefore perhaps be most attractive to taxpayers who can expect to exercise a significant degree of control over the companies in which they invest, to minimise the risk of the unexpected withdrawal of relief.
For further details see our latest Factsheet.