Budget 2011: Personal tax regime ‘should not be forgotten’
CHANCELLOR George Osborne should not overlook the importance of the personal tax regime to UK competitiveness in this week’s Budget, according to experts at accountancy firm Ernst & Young.
Wednesday’s Budget is being billed as one for business and economic growth and TheBusinessDesk.com has teamed up with Ernst & Young to bring our readers up-to-the-minute, comprehensive coverage of the event.
TheBusinessDesk.com will send a breaking news email to readers within minutes of the conclusion of the Chancellor’s speech, including analysis from experts at Ernst & Young.
A further comprehensive email news alert, including video commentary from Ernst & Young experts and all the major Budget headlines, will also be sent to readers on Wednesday afternoon as well as being available to read on our website.
TheBusinessDesk.com will also be blogging live during the Budget and video analysis will be available through our dedicated video channel, TheBusinessDesk.tv.
Predicting what measures Mr Osborne might announce in Wednesday’s Budget, Tim West, tax partner at Ernst & Young in Leeds, said the Chancellor could focus on ‘non-doms’ – British citizens with interests abroad who can register for ‘non-domiciled’ status, meaning they do not pay tax on earnings made outside the UK.
He said: “Non-doms are still fully liable to our income taxes for the work they carry out in the UK but – providing their affairs are properly structured – UK tax is not applied to income from work done outside the UK, or investment income, or capital wealth taxes.
“A £30,000 charge now applies for those who continue to utilise our non-dom regime after they have been here for seven years but, for many high net worth individuals, the charge may well be sustainable.
“The key issue is whether the measures the Chancellor announces in the Budget will make us less competitive when attracting individuals from overseas.
“There is a risk that the Chancellor may decide to increase the £30,000 charge or perhaps introduce it for the first seven years as well as thereafter. He may even remove the special regime completely after seven to 10 years.
“Whereas many of our competitors are improving their regimes to attract non doms, the UK seems to be going in the opposite direction and pushing people away.
“Ultimately, while building UK competitiveness the Chancellor has chosen to focus on the regime for corporates, underestimating the impact of measures for individuals even in the short-term could have a long-term impact.
“In his pursuit of the most ‘competitive tax system in the G20’, the Chancellor has been focused on corporation tax. However, it is the recent changes to the personal tax regime which are perhaps now having the most significant impact on the UK’s attractiveness as a place to do business. The Chancellor should to keep this front of mind for the Budget.”
