The Treasury’s 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 entrepreneurs and business owners.
To qualify under the new rules, the company must have a permanent base in the UK, but otherwise few restrictions are planned. Investment can be by an individual or a trust.
Tim Lyford, head of corporate tax at Smith & Williamson, says that 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,” he explains.
In recent years, non-doms have been discouraged from investing in UK businesses because of the potential tax charges involved.
However, the proposed new rules will make it easier for people to put money into companies – the flexibility will be welcomed.
“The changes should be great news for the enterprise economy,” adds Lyford.
“One aspect of the proposed rules which is slightly disappointing, however, is that they relate to investment only into companies. Investment into unincorporated businesses or partnerships will not qualify under the new proposals.”
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