Proposed new tax rules for ‘non-domiciled’ people who invest in companies which carry on a trade, or develop or let commercial property, are likely to give a welcome boost to the enterprise and SME sectors, say tax specialists at Smith & Williamson, the accountancy and investment management group.
To qualify, the company must have a permanent base here, but otherwise few restrictions are planned. Investment can be by an individual or a trust.
“In essence, the proposed new rules – which take effect from April 2012 - will give generous tax breaks to ‘non-doms’ who invest money from overseas in UK companies. Importantly, there will be no minimum or maximum investment and people will not have to work in the business receiving the investment – although it is perfectly acceptable if the individual or their family are involved with the organisation,” said Tim Lyford, head of corporate tax at Smith & Williamson.
Tim added: “In recent years, non-doms have been discouraged from investing in UK businesses because of the potential tax charges. However, the proposed new rules will make it easier for people to put money into companies and provide welcome flexibility. In short, the changes should be great news for the enterprise economy!”
“However, one aspect of the proposed rules which is slightly disappointing is that they relate to investment only into companies. Investment into unincorporated businesses or partnerships will not qualify under the new proposals.”