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Tax Aware

Issue 19: May 2023

Tax Aware

Editor's Note

Nicola Simmons, Associate, Mishcon Private

In this edition of Tax Aware, we discuss possible changes to the UK "non-dom" regime before summarising the Government's Tax Administration and Maintenance Day proposals to simplify the UK tax system. We consider a recent Supreme Court case regarding the VAT option to tax, and a GAAR Advisory Panel opinion regarding an SDLT saving scheme. We also review upcoming changes to US gift tax, and the proposed restrictions on UK charitable giving relief. We also discuss how Business Asset Disposal Relief (BADR) applies to temporary non-residents. Our Tax Aware FAQ this time focuses on the taxation of employee benefits.

Read the full note

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Non-dom regime: Are changes afoot?

A beneficial regime for non-UK domiciled persons (the "non-dom regime") was first introduced in 1799 by William Pitt the Younger during the Napoleonic wars to shelter those with foreign property from the UK's wartime taxes. The present-day non-dom regime remains a key feature of UK tax law, albeit an increasingly contentious one.

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Tax Administration and Maintenance Day: Let the consultations commence

On 27 April 2023, known as "Tax Administration and Maintenance Day", the Government announced a package of tax policy proposals and consultations. The proposals aim to "make the UK tax system more simplified, modern and fair", to tackle non-compliance and to improve the customs system for traders.

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You can't opt out of paying VAT

In the recent Moulsdale case, a VAT dispute heard at the Supreme Court is instructive in showing how the judiciary approaches legislation that is unclear.

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Planning for the US exempt amount 'sunset': A warning for taxpayers with US/UK connections

US persons currently benefit from a generous lifetime exemption from US federal estate and gift taxes of $12.06 million. This is due to 'sunset' from 1 January 2026 to $5 million, as indexed for inflation (expected to be approximately $7 million). Many US taxpayers with estates exceeding $7 million are therefore taking steps to take full advantage of the current allowance.

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How Business Asset Disposal Relief (BADR) applies to temporary non-residents

Where applicable, Business Asset Disposal Relief (BADR) results in a favourable 10% capital gains tax (CGT) rate being applied to qualifying capital gains (rather than up to 20%), on lifetime BADR gains of up to £1 million. It is usually relatively straightforward for an eligible taxpayer to claim BADR. A claim for BADR in respect of a qualifying business disposal must be made on or before the first anniversary of the 31 January following the tax year in which the qualifying business disposal is made.

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