Finance bill ‘leaves door ajar’ for non-doms to invest in the UK – EY

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Carolyn Steppler, private client tax services partner at EY comments on the non-dom legislation published in today’s Finance Bill:

“The Finance Bill has revealed significant but welcome changes to business investment relief, which is designed to allow non-UK domiciled individuals to make investments into UK businesses without triggering a tax charge.

 “The amendments to the legislation are a vast improvement on the original draft, which was published in December last year.  The availability of this new relief is likely to substantially increase the amount that non-UK domiciled individuals are willing to invest here, which should make the UK more attractive as a location to do business.

“However, it’s only the left the door to the UK ajar rather than fully open. The bad news is that it remains a complicated relief to navigate. The conditions applying to the investment both before and after it has been made, has created a number of traps for the unwary, which could lead to unexpected tax bills.

“Overall, this legislation represents a real step forward in attracting inward investment. Although even with the new relief, the UK is still falling behind some of its competitors. It is still more attractive, from a UK tax perspective, for a resident non-dom to invest in businesses in Europe or the United States, rather than in the UK.  We are hoping that further amendments can be made before the Finance Bill becomes law later in the summer.”