Steve Wheeler comments on business investment relief in Private Client Adviser

This article was first published in Private Client Adviser on 2 February 2015 and is reproduced by kind permission.

The government introduced tax relief provisions for non-domiciled UK resident tax payers in the Finance Act 2012; Steve Wheeler offers guidance on how to take advantage of them.

The 2012 Finance Act introduced provisions giving relief from tax under the remittance basis for non-domiciled UK taxpayers who bring funds to the UK, on or after 6 April 2012 to make ‘qualifying investments’. The use of this relief has increased since then among the entrepreneurial non-doms. It has proved very popular in new property investment and development businesses.

The relief allows UK resident non-domiciled individuals to remit overseas income and gains to the UK to invest in eligible businesses, without investments being treated as a taxable remittance. It applies to a qualifying investment made using overseas income that arose in any year in which the individual claimed the remittance basis, irrespective of whether the individual is still taxed on that basis in the year the money is brought to the UK.

The individual must use the remitted money or other property concerned to make a qualifying investment within 45 days of it being remitted to the UK. If all or part of the funds brought to the UK for investment are not used for that purpose, it will not be treated as remitted provided it is taken offshore again within the 45 day period.

A claim to the relief must be made by the first anniversary of 31 January following the end of the tax year in which the remittance is made, e.g. for 2014/15, by 31 January 2017. Although in practice the relief is usually claimed on the taxpayer’s tax return in the year in which the investment is made.

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Steve Wheeler