The recent Budget’s focus on private client issues means a busy summer for STEP’s UK technical committee, which will be working hard on its responses to the associated public consultations
The recent Budget’s focus on private client issues means a busy summer for STEP’s UK technical committee, which will be working hard on its responses to the associated public consultations.
Next month (May) we are promised the long-awaited draft legislation setting out a statutory residence test and abolishing the concept of ordinary residence for tax purposes. At the same time the Treasury will publish a summary of responses received to its previous consultation. The residence test – to be legislated in Finance Bill 2013 with effect from 6 April 2013 – is a crucial issue for many clients of STEP’s members.
“This summer’s consultations will form a fundamental part of the Treasury’s taxation plans for 2013 and beyond”, commented Wendy Walton, chair of STEP’s UK technical committee. “Despite this heavy workload, STEP’s UK Technical Committee will be vigilant as ever in scrutinising the details of these proposals. As always, we will take great care that our responses to the Treasury represent the interests of our membership.”
Also to be published in May is a formal consultation on the UK’s first “wealth tax”: an annual charge on high value residential properties owned by non-natural (i.e. corporate) bodies. This consultation will also cover extension of the capital gains tax regime to disposals of residential property by non-residents corporate bodies.
Two further proposals scheduled to appear in May will amend the inheritance tax regime for non-domiciled residents, again starting from April 2013. One of these will increase the IHT-exempt amount that a UK domiciled individual can transfer to their non-dom spouse or civil partner; the other will allow non-doms who have a UK-domiciled spouse or civil partner to elect to be treated as domiciled in the UK for the purposes of IHT.
The same month will also see the launch of two informal consultations. One relates to the easing of restrictions on Heritage Maintenance Funds trusts that defer capital gains tax charges arising from the re-settlement of assets from one to another. The second concerns the rules governing the transfer of assets abroad and gains on assets held by foreign companies controlled by UK entities, under ITA2007 s.714-751 and TCGA1992 s.13.
Next to appear, sometime in May or June, will be a formal consultation on the ten-yearly and exit charges that apply to many trusts. The fiendish calculations that currently determine the rates at which inheritance tax is levied on these events have long been a source of frustration, and the Treasury is now looking for a revenue-neutral way of simplifying them.
June will also see the consultation on a general anti-avoidance rule (now renamed by the Treasury as an “anti-abuse rule”). The Treasury intends to base its legislation on last November’s Aaronson report, but is certain to face criticism from those in industry and the professions who fear that HM Revenue & Customs would be tempted to abuse the wide discretion it would gain from a GAAR.
Some time during the summer there will be a critical consultation on the proposed GBP50,000 cap on the personal tax reliefs that currently have no limit. Key to this will be discussions with philanthropy organisations to ensure that the legislation – to be introduced in 2013 – will not harm charities that depend on large donations.