With the usual sense of dread and trepidation I log onto the HMRC website and delve into the key budget announcements likely to have the biggest impact on our business. An increasingly global and diverse client base at Boston lessens the tension a little but the UK is still a key market and so here I have highlighted just two areas of particular interest.
Tax is a dirty word these days but the Isle of Man is a low tax jurisdiction and we still maintain a legitimate, competitive advantage from this. Therefore, the first announcement to jump off the page relates to extending the policy of taxing ‘high value’ UK residential properties held by non-natural persons e.g. companies. I include ‘high value’ in inverted commas to reflect the ludicrous notion that a property worth £500,000 falls within this definition. A quick Google search of average house prices in England and Wales shows this to currently sit at £255,962 whilst in London average asking prices have reached £552,530! This policy extension now means that a company acquiring a property worth more than £500,000 will attract Stamp Duty Land Tax of 15% and be subject to the Annual Tax on Enveloped Dwellings charge and Capital Gains Tax. Previously, only properties valued at £2M and above were subject to this legislation.
The budget was also used to introduce a policy paper, ‘Accelerated payments of tax for avoidance schemes’, which details the UK’s intention to collect tax ‘up front’ in matters of dispute between HMRC and taxpayers. Alongside other measures this could have a huge impact on firms who promote and continue to use aggressive tax planning as until now the taxpayer has effectively been able to benefit from a tax deferral until such time as an enquiry is resolved. The boot is firmly on the foot of HMRC if this receives Royal Assent later in the year.
Each passing budget signifies the importance of growing and diversifying the Isle of Man economy. We must continue to strive to differentiate ourselves as reliance on a tax-centric business model is no basis upon which to build a future strategy for success.