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Offshore Newsletter
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Offshore Newsletter
L J Hadnum
Offshore Newsletter Well another budget has come and gone, and by and large the changes weren't too significant. There were certainly very few changes in terms of affecting offshore tax planning arrangements. The main impact was the proposed tax credit for overseas dividends and the removal of the benefit in kind tax charge where overseas property is purchased by a company but occupied by directors or shareholders. If you're interested in the impact of these, check out my blog on the wealthprotectionreport site which provides comments on these. If you haven't seen the tax blog feature yet,this covers various tax issues and opportunities that I come across, and is linked into the main site. New Articles There have been quite a few new articles published on the site, covering amongst other things: - The new company tax changes
- Establishing an overseas property as a residence to reduce UK tax
- Using non UK ordinary residence status to save UK tax
- Extracting assets from UK companies We're also in the process of upgrading existing articles for any Budget 2007 changes
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Latest Tax Reports |
 Tax planning for non doms returning to the UK and maximising the benefit of the remittance basis
It may be the case that any UK resident non doms leave the UK and establish non UK resident status. Any future return to the UK needs to be carefully considered in terms of UK tax. This article looks at how returning non UK domiciliaries could look to structure their affairs to maximise the benefit of the remittance basis and reduce UK tax . . . keep reading
 Using an offshore company for UK contractors to avoid UK tax
Any contractors working in the UK will usually do so via either (i) an umbrella company or (ii) by setting up their own limited company. The second option usually provides a better after tax result. Another option could be to use an offshore company, rather than a UK company, and look to avoid UK corporation tax. This article looks at how this could be structured . . . keep reading
 How bonus payments are taxed after you become non UK resident
There's been a lot of changes to the tax treatment of bonus payments over the past year or so. In this article we summarise the current tax position and consider the impact of the revised HMRC view on bonus payments as well as the subsequent changes to this including the impact of treaty residence . . . keep reading
 Top 5 Ways to Reduce Corporation Tax
Reducing corporation tax isn't like reducing capital gains tax. There's not a whole host of reliefs and exemptions that you can plough through to see if any apply. This article looks at some of the top ways that you can reduce your companies corporation tax liability . . . keep reading
 Using an LLP to maximise Entrepreneurs Relief and reduce capital gains tax
The new Entrepreneurs Relief provisions provide anyone selling a trading business with a significant reduction in their capital gains tax liability. Many business owners will look to establish businesses using a company but is this always the best structure? This article looks at the advantages of using an LLP in terms of maximising Entrepreneurs Relief and reducing capital gains tax . . . keep reading
 How a Panama Foundation is Treated for UK Tax Purposes
If you look at offshore companies or trusts on the internet you'll see these mentioned quite a lot. You'll see Foundations offered in lots of jurisdictions, but Panama and Liechtenstein tend to be popular. This article looks at how Panama Foundations are treated for UK tax purposes . . . keep reading
 Tax planning for non UK resident owning UK property investment company
Many individuals own UK properties via UK companies. This article looks at tax planning if the shareholders become non UK resident. In particular the tax position of any funding, restructuring the property ownership and the CGT position. . . . keep reading
 Selling property at a loss: Making the most of your property losses to reduce tax
With the current financial crisis and the drop in property prices there may well be many property investors selling surplus property at a loss on the original purchase price. In this article we'll look at how losses on the sale of property are calculated, how to make the most of them and any special rules that apply to these losses. |Image1| . . . keep reading
 The Non Resident Landlord Scheme and How To Complete Form NRL1
If you're non UK resident and receive rental income from a UK property you'll certainly need to consider the non resident landlord scheme. This article tells you how the scheme operates and also includes a summary of how to complete the form NRL1 (to receive rents free of UK tax deducted at source) including annoted extracts from the actual form. . . . keep reading
 Tax Planning for a UK resident Buying UK Investment Property via an Offshore Company
Following a post in our tax forum we've been asked for the tax implications for UK residents who have purchased UK property via an offshore company. More often that not this would be with some overseas partners. This article looks at the UK tax implications and planning opportunities . . . keep reading
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Tax rate changes The 2007 Budget brought some pretty significant changes to both the corporation and income tax rates, however most of these changes won't apply until 6 April 2008 or even later. What are the future changes? The changes announced in the 2007 Budget are to be brought in over the course of the next two tax years. I've set out below the changes and when they'll be introduced. 2008/2009 tax year • The small companies rate of corporation tax will increase to 21% (from 20% in the current tax year) • The main rate of corporation tax will reduce to 28% (from 30% in the current tax year) • The starting rate of 10% will be removed for salary income and pension income (but will still apply for savings income and capital gains). • The basic rate band will be reduced from 22% to 20%. • The upper earnings limit (UEL) for both Employees Class 1 NIC's and the Self Employed Class 4 NIC's will be increased by an additional £75 per week (£3,900 per annum) above indexation. 2009/2010 tax year • The NIC's UEL for Employees and the Self Employed will be aligned with the income level at which higher rate income tax is payable. • The small companies rate of corporation tax will increase again to 22%
Alignment of income tax and NIC This is an interesting development. Under the current regime there are separate 'higher rate' bands for both income tax and NIC. For example in tax year 2007/2008 for income tax purposes an individual is subject to the 40% rate of income tax when their total income exceeds £39,825 (£5,225 + £34,600). However in terms of national insurance the Upper Earnings limit is reached when income exceeds £34,840. There is therefore a difference of around £5,000 between the income tax and NIC limits. This means that someone earning £38,000 would still be subject to 22% income tax (to be reduced to 20% from 6 April 2008) but would only be subject to the 1% NIC charge which is payable once the UEL is exceeded. Therefore their marginal rate of tax would be 23% (ie for every pound they earn in this band, 23p would go to the taxman in income tax and national insurance). By contrast, someone earning £30,000 would be subject to the 22% rate of income tax and 11% NIC. This would equate to a 33% marginal tax rate, meaning they have a lower income but a higher tax rate. Someone earning over £39,825 would suffer a 41% marginal tax rate. Therefore to iron out these discrepencies, the Chancellor will increase the NIC limit by £3,900 in 2008/2009, after indexation. So, if we assume indexation of £1,300, this would equate to a new NIC UEL of £40,040. In the following tax year (2009/2010) the income tax and NIC limits will then be matched. The details of exactly how this will be achieved has not been released (eg whether there will be a rise in the higher income tax band next year or not) however the net effect is that for tax year 2009/2010 onwards the point at which individuals will become liable to higher rate income tax and cease to pay the 11% class 1 contributions will be the same. New Forum posts We're also copying all tax blog posts to the forum to allow members to comment.
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Site Editor
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Property Investment
