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Draft bill will help UK tax payers and advisors

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The publication of the draft Bill ahead of the UK Budget will help taxpayers and their advisers to consider the implications of the changes in advance of them becoming law, and to work with HMRC to iron out practical problems, says Louise Somerset (pictured), Tax Director at RBC Wealth Management…

In so far as individual taxpayers are concerned, we are expecting the draft Bill to include changes to the taxation of non-UK domiciliaries (non-doms), the definition of UK residence, and tax incentives for investing in small businesses.
 
The Government published a consultation paper in the summer including a number of welcome reforms to the taxation of the remittance basis which applies to certain non-doms. If implemented, these will simplify the current very complicated rules.

Some non-doms will find themselves paying GBP50,000 instead of the current GBP30,000 to avoid being taxed on their worldwide income and gains, but the more interesting change should enable wealthy individuals to bring offshore funds to the UK to invest in UK businesses without suffering a charge to tax.

There has been some speculation that the long-awaited (and broadly welcomed) codification of the definition of UK residence will be delayed. This would be a disappointment to many, as the existing position is so unclear that it is almost impossible for many internationally mobile individuals to have any certainty as to their residence status. We therefore hope to see draft legislation included in the Bill on Tuesday.
 
We are anticipating an enhancement to the existing enterprise investment scheme (EIS) rules, enabling investors to obtain income tax and capital gains relief on investments of up to GBP1million per year. We also hope to see more detail about the new incentive announced by the Chancellor on Tuesday, which would give 50% tax relief in 2011/12 on investments of up to GBP100,000 to support small businesses.

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