Dermot Callinan, Head of Private Client at KPMG UK, comments on the cumulative effect of measures announced in today’s Autumn Statement and over the past week, imposing higher taxation on non-UK residents and UK resident “non-doms”:
“With this package of measures, the Chancellor is creating a tougher and less consistent tax regime for non-doms investing in the UK.
“Firstly, the new extension of Capital Gains Tax (CGT) which, for the first time in the UK, will be imposed on those with property interests in the UK even if they don’t live here. Non-residents are also being hit with a new rule which makes it extremely difficult for them to claim exemption on their main UK residences. In future, they will have to effectively become tax residents in the UK in order to benefit from the exemption by living in the property for at least 90 days.
“The second measure increases the cost of maintaining non-dom tax status for long-term UK residents here for 17 years by £40,000 each year to a total of £90,000 a year. This makes the “non-dom club” even more exclusive because effectively, the annual membership has just gone up.
“Finally, the Chancellor has also announced another change to the Annual Tax on Envelope Dwellings (ATED). The extension of the tax for residences worth more than £2 million, is aimed at squeezing more properties out of those corporate structures often designed to mitigate the effects of inheritance tax for non-doms.
“These measures along with the proposed increases in the top rate of stamp duty land tax may confuse and deter wealthy foreign individuals from investing and living in the UK because of the complexity and uncertainty of which tax will be extended or increased next for the very wealthy.
What we have here is a policy trade-off between securing perceived tax fairness from wealthy non-doms and driving them away with uncertainty.”
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Jess Liebmann, KPMG Corporate Communications
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KPMG Press Office: +44 (0) 207 694 8773
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KPMG LLP, a UK limited liability partnership, operates from 22 offices across the UK with approximately 11,500 partners and staff. The UK firm recorded a turnover of £1.8 billion in the year ended September 2013. KPMG is a global network of professional firms providing Audit, Tax, and Advisory services. It operates in 155 countries and has 155,000 professionals working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. Each KPMG firm is a legally distinct and separate entity and describes itself as such.
This article represents the views of the author only, and does not necessarily represent the views or professional advice of KPMG in the UK.