ANNOUNCEMENT 08 Jul 2015In July 2015, the British government announced altered domestic business conditions for foreign investors.
NUMBER OF INTERVENTIONS
Key aspects of the summer 2015 budget speech
Overview of AIA changes
Secondary Source on the AIA change
On 8 July 2015, the Chancellor announced the summer budget for 2015.
Canceled bank levy for overseas bank subsidiaries
Starting in 2021, overseas' subsidiaries of UK banks will no longer have to pay the bank levy - charged on banks' balance sheets - which until then shall be lowered from 0.21% to 0.1%.
Higher taxes for foreign fund managers
Foreign fund managers in the UK will effective immediately no longer be allowed to receive carried interest (which the Chancellor referred to as tax loopholes) and will instead have to pay the full capital gains tax of 28%.
Furthermore, the country will abolish the non-domiciled status in April 2017. This status was given to individuals living in the UK but who consider their permanent residency to be somewhere else. Until now, they were taxed on their offshore income only if they brought it to the UK. Once this status has been abolished, residents who have spent at least 15 out of the last 20 years in the UK will be required to pay the full income tax. According to Lexology (cf. Sources), this practice has been particularly popular among U.S. fund managers. Hence, the United States have been selected as an affected jurisdiction.
Lowered annual investment allowances
The Chancellor also announced the government will reduce its maximum annual investment allowance (henceforth: AIA) from 500'000 GBP to 200'000 GBP.
The AIA is a tax relief scheme introduced on 1 April 2008. It allows companies to deduct investment-related taxes based on certain investment made in a given year. These investments may not include cars, products owned for another reason before being used by the company, or if given to the company.
The changes come into force for companies on 1 January 2016, but for sole traders/partners only five days later.
A state measure in the GTA database is assessed solely in terms of the extent to which its implementation affects the extent of discrimination against foreign commercial interests. On this metric, the state aid proposed here is discriminatory.