The UK’s tax regime should be simplified in an effort to get the UK economy open again, according to tax and advisory firm Blick Rothenberg.
Robert Pullen, a partner at the firm said that following the “unprecedented” steps taken by chancellor Rishi Sunak to prop up the economy during the coronavirus crisis, “many are considering how best to get the economy open again once safe to do so”.
He said: “Part of the solution should involve reforms to the UK tax regime, to encourage more inward investment from private individuals. A key aspect of this might be for HMRC to look again at the taxation of internationally mobile individuals and non-domiciled individuals.”
The firm said a raft of changes were introduced in 2017 and 2018 to the taxation of such individuals which restricted the availability of the UK’s special tax regime for non-doms, known as the remittance basis.
It added that this tax regime means that individuals eligible only pay tax in the UK on amounts brought to the UK, such as to purchase a house or to buy a car.
Pullen said in order to kick-start the economy, HMRC could “loosen the restrictions in this area”, and added: “For many years, non-doms have had a tax exemption on their overseas income and gains, provided the money is not brought into the UK; however, this has had a knock-on effect of dampening spending in the UK, as non-doms are deterred by suffering UK on any amounts brought into the country.
“For a limited time only, from April 2017 to April 2019, the UK Government introduced an opportunity for funds frozen outside of the UK to be restructured and brought to the UK. Whilst complicated, this unlocked a significant amount of capital, which in turn would have begun circulating in the economy, generating profits and tax revenue, such as VAT on purchases.”
Pullen concluded: “One way the Government could encourage a similar spike in spending would be to reintroduce the special regime from 2017, or to bring in a simpler set of rules which allows individuals to remit monies to the UK and pay a flat tax rate, of say 10%.”
