The Home Office recently released its statement of changes setting out proposed changes to UK immigration rules. The statement contains the long-awaited details of changes to the Tier 1 (Investor) visa, which were announced in December 2018 shortly after the Home Office backtracked from its announcement that the visa was about to be suspended. The proposed changes are significant and clarity is needed with regard to the application of the transitional rules.
The government recently published long-awaited draft legislation for the reform of the taxation of non-UK domiciled individuals. It includes provisions to bring into the scope of inheritance tax UK residential property held by non-domiciliaries through offshore companies and other entities, together with provisions introducing new deemed domicile rules for long-term UK residents and individuals born in the United Kingdom with a UK domicile of origin.
The government recently published its long-awaited follow-up consultation on the proposals for reform of the taxation of non-UK domiciled individuals, which were initially announced in the July 2015 Summer Budget. The consultation includes details of the proposals for bringing into the scope of inheritance tax UK residential property held by non-domiciliaries through offshore companies and other entities.
Given the likely economic pressures on the United Kingdom following Brexit, the government may take a more welcomed approach to wealthy foreigners than it has done in the recent past. As such, wealthy individuals would be well advised to continue to review UK property holding structures on the basis that promised tax changes will come into effect but, as far as possible, delay implementation of any restructuring until the position is clearer.
The government has proposed that from April 2017, foreign companies and other non-UK vehicles holding UK residential property will be regarded as transparent for inheritance tax purposes, regardless of the domicile status of the underlying beneficial owner or settlor. Individuals and trustees with residential property holdings who are concerned about the changes may wish to consider restructuring options well in advance of the anticipated deadline.
In a departure from recent UK budgets, the chancellor announced relatively few new measures in the 2016 Budget which specifically target wealthy international individuals and their families, or their wealth-holding structures. Nevertheless, certain measures were announced that will be relevant to such individuals, some of which may be beneficial and others less so.
In the Autumn Statement 2015 the chancellor announced an increase in the rate of stamp duty land tax that will be paid from April 1 2016 on purchases of additional residential properties valued over £40,000, such as buy-to-let properties and second homes. The new rules will likely result in a significant additional acquisition cost for many wealthy foreign and UK individuals purchasing UK residential property.
The government recently published a consultation proposing the introduction of a 1% stamp duty land tax surcharge on non-residents acquiring residential property in England and Northern Ireland. The proposals include applying the surcharge to non-resident individuals, companies, partnerships and trusts. However, the government is considering relief for non-UK resident individuals who are Crown employees subject to UK income tax at the time of the transaction.