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The government is back to designing and implementing tax policy ‘on the hoof’

Date: 30 Jun 2016

Bumblebee Design

Andrew Goldstone, head of tax, Mishcon de Reya, says that recent changes affecting UK residential property and the surprise announcements in the Budget to reduce the CGT rate and introduce Investors’ Relief are examples of rushed tax policies. 

Will we see non-dom UHNW individuals leaving the UK with the new nom-dom rules? Will trusts help?

There’s unlikely to be a rush to leave after April 2017. A small number of UHNWs will organise their affairs to avoid being UK resident for at least five years, but, Brexit aside, most other long-term resident non-doms will stay. Up until now, non-doms are aware that the rules have been relatively relaxed and so it’s likely they will reluctantly accept the new regime. Will trusts help? Possibly, but the proposed trust rules are contentious and potentially complicated. Until we have more detail, it’s hard to say if trusts are the solution.

Should UK residential property owners wind up holding structures now or hope for the relief that was hinted at in the last budget?

Although we’re still waiting for details of any reliefs, there’s little doubt the 2017 tax changes will happen. There’s bound to be a rush to liquidate property-holding companies in the run up to April so it makes sense at least to start the process now, especially where shareholders are non-resident or there’s little or no historic gain and no mortgage. But for those relying on possible reliefs, they should wait and see.

What trends are there?

After a period of sensibly putting out proposed tax changes for consultation, the Government seems to be returning to designing and implementing tax policy on the hoof. And that applies as much to tax cuts as it does to tax increases. Recent changes affecting UK residential property are prime examples, as are the surprise announcements in the Budget to reduce the Capital Gains Tax rate and introduce Investors’ Relief.

This article was published in Citywealth Weekly, our mid-week roundup of topical news and exclusive expert comments. Sign up here to start receiving the Weekly in your inbox.