On 11 March 2020, the UK Chancellor Rishi Sunak delivered the first Budget of Boris Johnson’s new Conservative Government, and the first of the post-Brexit era.
Significant tax changes were anticipated before the Budget, with many commentators expecting changes to the UK Inheritance tax regime, pension tax reform as well as further possible restrictions to the rules affecting non-UK domiciled individuals. However, these did not really materialize, with only minimal tax changes being announced on 11 March.
Instead, many announcements were focused on the fight against COVID-19 (e.g. sick pay changes, business rates relief, extra funding to the UK National Health Service). Another focus was fulfilling the government’s manifesto pledges to invest heavily in public services, especially in areas outside of London and the south of England, to repay the trust of voters at last December’s election.
Nevertheless, there were some announcements that may be of interest to individuals and businesses in Switzerland, which are discussed below.
Stamp tax surcharge on the acquisition of UK property by non-residents
With effect as of 1 April 2021, an additional 2% stamp tax surcharge will apply to all non-UK residents purchasing UK property. This means non-UK investors could face a maximum stamp tax rate of 17% from April next year, and this is likely to lead to a surge in non-UK investors trying to conclude any UK property purchases before the new surcharge take effect in April 2021 (this tax planning point should be noted by all Swiss financial institutions with clients interested in buying UK property).
Scrapping the planned reduction in UK corporation tax
The UK corporation tax rate of 19% was planned to be reduced to 17% with effect as of 1 April 2020. However this has now been scrapped, with the rate instead frozen at 19%.
Swiss banks and fiduciaries will be pleased to hear that there were no changes announced in the March 2020 Budget to the “Non-Dom” regime, so it should remain business-as-usual for Swiss financial institutions serving UK Non-Dom clients.
The same goes also for UK inheritance tax (“IHT”), where the Chancellor has decided (for now at least) to leave the status quo and not make any changes to the UK’s IHT regime. However, it may only be a matter of time before changes to the IHT regime are made, since it is known that this is on the Chancellor’s agenda; Swiss fiduciaries in particular should watch out for any developments in this area over the coming months (perhaps as early as Autumn 2020).
COVID-19 has dominated many of the decisions in this latest Budget and we expect other issues to be addressed in future. Keep an eye out for future updates in KPMG’s Tax & Legal News.