The Chancellor of the Exchequer on 18 March delivered his 2015 Budget. Together with confirmation of many of the measures announced in the Autumn Statement, the Chancellor also set a target to achieve £5 billion in savings by 2017/18 specifically from tax evasion and aggressive planning. The focus on high earners and the broader wealth management industry was not as strong as one might have expected from the Chancellor’s final Budget before the May election. Nevertheless, there are abundant changes to be borne in mind in the last two weeks of the tax year.
The planned increase in the remittance basis charge (RBC) to £60,000 from £50,000 for non-domiciles (RNDs) resident in the UK for 12 of the past 14 years is confirmed and comes into force this 6 April together with the new £90,000 charge for those resident for 17 of the past 20 years. The open consultation on whether RNDs should be required to elect the remittance basis for a minimum period of 3 years ends on 16 April.
Finance Bill 2015 will also introduce the widely publicised capital gains tax for non-residents on disposals from 6 April of UK residential property and will restrict principal private residence relief on properties sited in countries where the taxpayer is not tax resident unless they spend at least 90 days in the property during the relevant year. The threshold for application of the ATED CGT charge also comes down to £1,000,000 (and £500,000 in 2016).
Against the backdrop of increasing global tax transparency, legislation for the OECD Common Reporting Standard is due to be prepared together with measures for implementation of Diverted Profits Tax, which is still due to enter into force in April. Perhaps more significant are widespread alterations, not referred to expressly in the Chancellor’s speech, to existing disclosure facilities.
The Liechtenstein Disclosure Facility (LDF), which has been in force since 2009, will close three months early at the end of 2015 together with closure of the Crown Dependencies Disclosure Facilities (nine months ahead of schedule), which may prompt many to complete assessment of their tax affairs sooner than planned. Also announced is a new “last chance” disclosure facility, which is due to open in 2016 and last until mid-2017. Those using the new facility are expected to have to pay tax due, plus interest, plus penalties of up to 30%, with no guarantee of immunity from prosecution.
The plethora of tax avoidance and evasion measures debated over recent months also remains on schedule, including enhancements to the DOTAS regime and issuance of further Accelerated Payment Notices. A review into inheritance tax avoidance via Deeds of Variation is also added to the agenda and, in addition to planned increases in civil penalties for tax evasion, details of a new criminal offence and the consequences for professionals who assist in such evasion are expected to be released on 19 March.
Many will be glad that the Budget did not include further unexpected reform of RND taxation and others will be focussing increasingly on the upcoming pension access changes. However, as now tends to be the case, extensive changes were already announced in the Autumn Statement and clients, particularly those with complex offshore affairs, now have less time to structure their wealth appropriately.
The UK advantages of compliant Luxembourg life assurance policies remain unaffected.
Please do not hesitate to contact Simon Gorbutt or your usual Lombard International Assurance representative if you have any queries or require further information.