Steven Pepa’s Post

As I told Charlotte Gifford of The Telegraph, not only are the Non Doms bolting, but so are HNW UK domiciled taxpayers. The later because of additional concerns about IHT and capital gains....specifically an Exit Tax! The UK is one of the few G20 countries which do NOT have an Exit Tax (i.e. deemed disposition for capital gains purposes) upon becoming non-resident for tax purposes. In contrast to a Wealth Tax, an Exit Tax is: a) Easy to implement and enforce; b) A "one and done" so there is no concern about refunds if the assets lose value in the future; c) Has proven workable in a number of countries over a long period; and d) Seen to be politically palatable as it captures the capital gain that the individual experienced while living in the country. While various groups are pushing a Wealth Tax, I think that Rt Hon Rachel Reeves will find an Exit Tax an easier tax tool to reach for in her toolbox of options. The fact that few advisors are talking about its possibility is a bit disconcerting. #remittancebasis #nondom #exittax #capitalgainstax #iht #taxtherich #wildfire #fireinsurance #fireescapeplan #secondresidence #secondcitizenship #alternativeresidence #alternativecitizenship #lineagecitizenship #residencebyinvestment #goldenvisa #citizenshipbyinvestment #Aliyah #lawofreturn Piers Master Ceri Vokes Brent Hoberman Tim Stovold Alistair McPherson Dominic Lawrance Michael Davidson, CPA James Quarmby Dan Neidle Stanley C. Ruchelman Steve Griffiths Niklas J.R.M. Schmidt Cécile Civiale Vuillier, TEP Martin N. Smith Ben Staff TEP Richard Adams Andrew Prince STEP Affiliate Steven Landes David Wallace Wilson James Drace-Francis FCA Alexander Jeeves Adrian Shipwright Robert Anthony

As I discussed with Ali Lyon, it was easy to predict that Resolution Foundation would suggest that an Exit Tax would be a suitable tool for Rt Hon Rachel Reeves to reach for in generating future tax revenue. Along with my comments in the article, I would also like to make these few points on questions raised by others: 1) "CGT hasn't generated much revenue in the past": Absolutely true...but that was because there was no Exit Tax when one left! Imposing an Exit Tax would change that dramatically; 2) "It is difficult for HMRC to place a value on non-publicly traded assets": In all the other tax regimes that have an Exit Tax, the tax authority doesn't set the valuation, the taxpayer does. If the value put on the asset is not defendable with independent professional valuations done according to GAAP, then the tax authorities can challenge the valuation in an audit. This motivates the taxpayer to make a credible valuation; 3) "The UK doesn't give an automatic step-up to FMV on the cost basis upon establishment of UK tax residence, so an Exit Tax would be "unfair"". Some jurisdictions give an automatic step up (e.g. Canada) while others do not (e.g. US). If the government feels that no step up is "unfair" then they can choose to follow the Canadian rather than American model...or not. The distinct possibility of an Exit Tax being announced in the October 30th budget combined with the possibility that the implementation date will be the day before is making many of my prudent clients implement strategies to be able to claim non-residence prior to October 29th. If the worst happens, then they will avoid a SIGNIFICANT tax hit. If it doesn't happen then they don't have to claim non-residence. No harm no foul. With 33 days of runway left to implement that strategy, the time to act is now. #remittancebasis #nondom #exittax #capitalgainstax #iht #taxtherich #wildfire #fireinsurance #fireescapeplan #secondresidence #secondcitizenship #alternativeresidence #alternativecitizenship #lineagecitizenship #residencebyinvestment #goldenvisa #citizenshipbyinvestment #Aliyah #lawofreturn https://lnkd.in/dQaMz62u

🚨 Attention UK Entrepreneurs: Major Tax Proposal Alert! 🚨 In a recent announcement, the British Chancellor has proposed a drastic measure that could significantly impact high-net-worth individuals and entrepreneurs: a doubling of the capital gains tax from 20% to 39%. This is part of a continuing trend where the UK's fiscal policies heavily target the wealthy, akin to the recent changes in Non-Dom amendments. Why should this concern you? 🤔 Such a steep increase in capital gains tax could stifle the entrepreneurial spirit and prompt business leaders to seek out more conducive environments for their ventures. Many are already relocating to tax-neutral jurisdictions like the UAE, which not only offer financial incentives but also greater economic stability amid the UK's shifting tax landscape. If you are a UK entrepreneur concerned about how to preserve and protect your wealth in light of these potential changes, it's critical to consider your options now. 🌍 At Water & Shark Private Client Practice, we specialize in guiding clients through these complex decisions with ease. Whether it involves relocating your business operations or becoming a tax resident in a more favorable jurisdiction, we ensure your assets and future are well protected. 🔍 Curious about how these changes could affect you and what steps you can take? Feel free to reach out to us at [email protected] or [email protected]. I am here to personally assist you in navigating these challenging times. #TaxPlanning #Entrepreneurship #CapitalGainsTax #HNWI #UHNWI #WealthManagement #TaxRelocation #WaterAndShark Water & Shark Water & Shark Legal #UKTax #UKinheritancetaxes https://lnkd.in/dfCXtnhu

An 'Exit Tax'.... Capital controls by another name... When John MacDonnell and Corbyn were talking about nationalising everything and 'taxing the billionaires' his answer to fears of capital controls was: “I want to make it absolutely explicit that capital controls would not happen under a Labour government. We don’t see any necessity for them.” We managed to swerve the bullet of a MacDonnell Chancellorship, but what is an 'Exit Tax' other than a form capital control? It seems to me that such a tax would be a something that would keep the radical left happy although in practical terms it would do massive damage to the economy. CGT raises £14 billion a relative drop in the ocean. If owners of businesses in the UK are faced with such a tax they will relocate and that CGT may rise slightly but the knock on in company national insurance, income tax, corporation tax etc will negate any gain. I live in Dubai and there are more and more people moving. Soon Abu Dhabi will have more people I know in finance than I know in London. Sure, London has recently been closing in on New York as the 'financial capital'... that doesn't mean anything to you or I. The fact that multi-billions in FX and complicated derivatives that have zero to do with the average person flow through the UK..who really cares? As we have seen, a decreasing amount of money is going into the LSE, the AiM market is on the 'verge of collapse' according to the LSE boss and yet we are expected to cheer London being the 'best financial center in the world'? UK SMEs have 61% of the employees in the UK. If Labour were really wanting to plug the gaps and benefit these people they would encourage entrepreneurs to stay. Increase EIS, force VCTs to actually invest in venture stage businesses... They should extend a hand to overseas investors, big up the ecosystem, the legal surety and have a long term goal that ALL parties have to sign up to. Entrepreneurs, on the whole, are not rapacious greedy people. Tax is a cost of doing business and mostly entrepreneurs are community minded, most are intent on solving problems and they realise that tax is a part of that. ..but they are not going to put up with a complex tax that could see them paying tax on gains they haven't liquidated yet. They are going to go where their options are open and they are not starting a business in a tax trap.

Labour’s potential Capital Gains Tax hike – What does this mean for UK businesses? 🤔 Great to see our very own Tax Partner, Thomas Adcock, featured in the The Independent today. In the article, Tom discusses how the prospect of #GCT rising is driving behaviour, as clients are beginning to rush through transactions to avoid the spectre of potential tax rises and benefit from the perceived lower tax rates of today 💷 He also addresses how non-doms, UK resident and domiciled people have had enough of increased tax rates: “Perhaps what’s more troubling is the number of entrepreneurs, high earners and wealth generators that are choosing now to leave the UK” 🏠 🔗Read more here: https://shorturl.at/wDbAS #Gravita #CapitalGainsTax #Tax #Non-Doms #LabourTaxIncrease #Entrepreneurship ------------------------- 👋 We’re Gravita, we’d love to talk 🙌 Build the future together 🌐 Tech enabled, full-service firm of accountants, with global reach See more from us: 🔔 Click the bell on our profile to be notified of our posts ➕ Make sure you’re following us 📝 Sign up to receive Gravita’s latest updates and webinar invites: https://lnkd.in/ecugk7WR

Remarkably, HM Treasury can be made to see sense having just reversed its recent sudden increase to the SEIS/EIS thresholds defining a high net worth #investor. As reported by Charles Harrewyn UKBAA “40 pages of insight and data, four letters to the chancellor and the Treasury from Jenny Tooth OBE, supporting a campaign by Dom Hallas and the Startup Coalition” actually got a positive result. As many #entrepreneurs and #angelinvestors have commented, the #chancellor should allow all who pay income tax to participate in the SEIS/EIS tax relief scheme. Investing in startups with solutions to societal problems creates jobs and helps to grow the economy. As Robin Maxwell said: “Supporting #privateinvestment needs to become a national effort.” The Chancellor could go further. Why disenfranchise so many potential income tax paying investors when it’s also such a good scheme for HM Treasury with an excellent ROI to pay for all the services society needs. Now that would be smart! #angelinvesting #venturecapital #privateequity #privateinvestment #netzero

Szu Ping Chan and Charlotte Gifford highlight the possibility of Rt Hon Rachel Reeves announcing an Exit Tax (i.e. deemed disposition of unrealised capital gains upon becoming UK non resident) as suggested by Institute For Fiscal Studies in the October 30th budget. One of the major reasons that clients retain me is my pragmatic clear eyed ability to anticipate the possible/predictable consequences of future tax policy. With the Chancellor possibly backing away from Non Dom and IHT changes, she has to fill the "fiscal hole" and pay for NHS and Breakfast clubs somehow. Wealth Taxes have a significant number of impracticalities, which is why many countries which tried them later stopped. Exit Taxes don't have those problems...which is why the countries which have them have kept them. I would therefore ask advisors which of the following is a better outcome for their HNW clients: 1) The clients go through the relatively small expense of preparing to being able to claim non-residence BEFORE an Exit Tax is imposed; VERSUS 2) The payment of capital gains upon non-residence (or being trapped in the UK tax system) AFTER an Exit Tax is imposed. Unfortunately advisors still advise against such planning because it is not certain that an Exit Tax will be announced in the budget. This is equivalent to advising to wait until the Fire Chief to confirms the client's fiscal house is engulfed before calling a Fire Insurance Agent. #taxtherich #exittax #capitalgains #ukbudget #wealthtax #nondom #remittancebasis #iht https://lnkd.in/d7kiFg_G

Final predictions for the Budget...? Here are mine: 1. Italian style regime replacing the remittance basis, limited to 10 years; 2. a flat annual fee of £150,000 to access the regime; 3. reform of the deemed domicile rules for tax purposes; 4. perhaps something on IHT? We shall find out in half an hour. #nondoms #remittancebasis #privateclient #privatewealth #trustsandestates #uktax #ukimmigration #wealthmanagement

Will we see an expedited increase in Non-Dom UK property purchase and mortgage applications during the FIG regime, or will there be a retraction? Simplified Summary of Changes to UK Taxation of Non-Domiciled Individuals Effective April 6, 2025: • Remittance basis abolished: Non-domiciled individuals residing in the UK will be taxed on their worldwide income and gains, regardless of where the money is kept. • New 4-year foreign income and gains (FIG) regime: Individuals who become UK resident after 10 years of non-residence can exempt the first 4 years of foreign income and gains from UK tax. • Simplified Overseas Workday Relief (OWR): Available for the first 3 years of UK residency for individuals using the 4-year FIG regime. • Trust protections removed: Non-domiciled individuals (except those using the 4-year FIG regime) do not receive tax protection for income and gains arising within trust structures. • Temporary Repatriation Facility (TRF): Remit pre-April 2025 foreign income and gains at a reduced 12% tax rate in tax years 2025-26 and 2026-27. • Capital gains tax rebasing: Individuals transitioning from the remittance basis can rebase certain assets to their April 5, 2019 value. • Inheritance tax (IHT) consultation: The planned shift from a domicile-based to a residence-based system (subject to consultation). Key points to remember: • Individuals already using the remittance basis in 2024-25 will have a one-year transition period with reduced taxes on foreign income. • The new system aims to simplify taxation for non-domiciled individuals residing in the UK. Note: This simplified summary is different from professional tax advice. It is recommended that you consult with a tax professional for personalised guidance. #nondom #ukmortgages #springbudget #privateclient #highnetworth

Tax Commissioner Rob Heferen warns that Australian small businesses are increasingly falling behind on tax and superannuation obligations, with the Australian Taxation Office (ATO) pursuing $50 billion in outstanding debts. Heferen highlights the risk of businesses trading while insolvent, especially in the aftermath of disruptions caused by the COVID-19 pandemic. Of the $50 billion debt, 65% is attributed to small businesses, with nearly 75% relating to regular activity statements, indicating significant challenges in GST and PAYG withholding payments. The ATO ended special debt collection arrangements initiated during the pandemic, emphasizing the importance of taxpayers meeting their obligations. Businesses using unpaid tax liabilities as a cash flow buffer are warned against this practice, as it unfairly impacts compliant businesses and can lead to trading while insolvent. Tony Greco of the Institute of Public Accountants expresses concern over small businesses' ability to catch up on tax debts, suggesting that ATO actions might accelerate closures for unviable businesses. The ATO's annual report reveals a significant increase in the debt book over four years, reaching $50.2 billion, with efforts such as tax audits contributing to recouping $7.7 billion. Unpaid superannuation guarantee charge debt has doubled from pre-pandemic levels to over $2 billion, with small businesses accounting for $1.8 billion of this debt, affecting retirement benefits for workers.