The July 2016 edition of KPMG's Private Client magazine Personal Perspectives focuses on a variety of contemporary issues on which we are currently advising that are relevant to wealthy individuals, family offices and entrepenuers.
In addition to the articles within this edition, highlighted below is a snapshot of developments on some of the more significant areas of change that are relevant for Private clients. Further information and comments are available via the links provided.
- For capital gains accruing on or after 6 April 2016, capital gains tax (CGT) rates will be reduced from 18% to 10% for basic rate taxpayers, and from 28% to 20% for higher rate taxpayers. These reduced rates will not apply to gains on the disposal of residential property (other than those qualifying for private residence relief) and the receipt of carried interest which will continue to be taxed at a new ‘upper rate’ of 28%. Find out more here
- There have been significant changes to the taxation of investment management executives’ reward including the disguised investment management fee and carried interest rules. See more information here.
- A consultation has been published on the substantial shareholdings exemption (SSE) which provides exemption from corporation tax for capital gains and losses realised on the disposal of certain shareholdings. This could impact Family Investment Companies. Find out more here.
- For those acquiring Employee Shareholder Shares after 16 March 2016, a lifetime limit of £100,000 of CGT exempt gains that a person can make on the disposal of those shares will apply.
- The Supreme Court ruled in HMRC’s favour and refused the Eclipse Film Partners (No 35) LLP permission to appeal the Court of Appeal’s decision. Therefore the findings of the Court of Appeal stand. We may now see HMRC starting to issue Follower Notices to taxpayers who invested in any Eclipse or similar partnership.
- If any assets of a trust are located in France or if one of the beneficiaries, the settlor or trustees are French tax resident then the trustees are required to make reports to the French tax authorities. These reports are annual but can also be event-triggered. The French register of trusts is to be made publically available.
- From 6 April 2016 banks, building societies etc. stopped deducting tax at source on interest. Individuals should consider putting aside the tax that will in future be due on such interest received, which will either be paid through adjustments to PAYE code numbers or via Self-Assessment (for example in January 2018 for the 2016/17 tax year, plus increased payments on account).
- Alongside the introduction of new anti-avoidance rules in respect of profits arising from trading in and developing UK land, there have been amendments to certain double tax agreements. Although the genesis for these changes appears to be the activities of non-UK resident developers, the changes impact both UK and non-UK residents equally.
- If a close company (e.g. typically owned by five or fewer shareholders) makes a loan to a shareholder which is not repaid within nine months of the end of the accounting period, tax is due on the loan (and repayable when the loan is repaid). From April 2016 the tax rate increased to 32.5%(previously 25%) bringing it in line with the rate a higher rate taxpayer pays on dividends.
- Digital Tax Accounts will apply to some individuals registered for Self-Assessment from 2018, and may provide an overview of an individual’s tax liabilities in 2017. By 2020 there will be a requirement to keep track of affairs digitally and update HMRC quarterly, with a ‘pay as you go’ method moulding tax payments with actual cash flow.
Simon Johnson. Director, Private Client
Sarah Charles. Manager, Private Client