Proposed Changes for Non-UK Companies
Story added: 25/02/2008
Under current rules, non-UK domiciled individuals are excluded from the anti-avoidance rules that attribute gains realised in certain non-UK companies to domiciled residents. The proposed legislation brings these UK resident non-domiciliaries within the same rules as the UK domiciled residents: - The rules apply to a foreign company that, if it were a UK company, would be considered a close company.
- After 6 April 2008, a UK resident but not domiciled individual with a greater than 10% interest (directly or through ownership with connected parties) in such foreign company will be attributed any capital gain realised by the company in proportion to his interest.
- If the gain is realised on a UK asset then the charge to capital gains tax will be on an arising basis; if a non-UK asset the charge will be on a remittance basis, if it has been elected.
An important point to note here is that where an offshore company holds a non-domiciled individual's home then principal private residence relief will not be available to relieve the gain, or portion of the gain that relates to the period of ownership by the company.
The interaction of the changes to the non-UK trust and company rules means that structures where the company is owned by the trust will flow through to the settlor or to the beneficiary of the trust.
Please contact us if you believe you may be affected by the proposed changes to the taxation of offshore companies.
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