Budget 2011 and Immigration
29 March 2011
Welcome news for international individuals
Positive news for international individuals in last week's Budget, together with changes to immigration rules coming in shortly, means the UK continues to be an attractive place for international individuals to come to live and work.
The Government followed up on its statement last June to review the taxation of non-domiciliaries by announcing reforms and the introduction of a statutory residence test. The reforms look to make the UK a more attractive place to invest by removing tax charges and to provide more certainty of tax treatment with a simpler tax system. Investors and entrepreneurs will also benefit from changes to the immigration rules allowing accelerated settlement.
Taxation of non-domiciliaries
In the Budget the Government announced that it will consult in June 2011 on three specific proposals for the reform of the remittance basis of taxation applying to non-domiciliaries. The reforms are to be implemented in April 2012.
Proposed reforms -
1 Remove the tax charge where a non-domiciliary remits foreign income or capital gains to the UK for commercial investment in UK businesses. (The Government is concerned that the current rules provide a disincentive to non-domiciliaries investing in the UK)
2 Retain the existing £30,000 remittance basis charge, but increase it to £50,000 for non-domiciliaries who have been UK resident for at least 12 of the 14 years immediately preceding the year for which the remittance basis claim is made
3 Simplify some aspects of the current tax rules to remove undue administrative burden
The Government stated that there will be no other substantive changes to these rules until after the next general election.
Statutory residence test
The Government will consult in June 2011 on the introduction of a statutory definition of residence to provide greater certainty as the current rules are complicated and unclear. The test is to be implemented from April 2012.
From 6 April 2011, foreign entrepreneurs and investors will benefit from changes to the UK immigration rules.
People who invest £5 million will be allowed to settle here indefinitely after 3 years, and those investing £10 million or more will be allowed to settle indefinitely after 2 years. This compares with the current minimum 5-year requirement. The right to accelerated settlement will apply to those investors who are already in the UK and have invested large sums, as well as new arrivals.
The standard investment threshold for entrepreneurs remains at £200,000, but high-potential businesses can come to the UK with as little of £50,000 in funding from a reputable organisation. Entrepreneurs will also be able to settle in the UK more quickly if they create 10 jobs or turn over £5 million in a 3-year period.
Major investors will also enjoy more flexibility: they will be allowed to spend up to 180 days per year, rather than 90, outside the UK without affecting their right to settle here, while maintaining mobility.
For further information please contact Michael Evans, Beatrice Puoti or John Barnett.