The UK’s Chancellor of the Exchequer, Jeremy Hunt, delivered the Spring Budget on 6 March 2024 announcing a variety of measures impacting the financial services industry.
CARF and CRS Consultation
A consultation has been initiated on the adoption of new international standards on the exchange of information, encompassing revisions to the Common Reporting Standard (CRS) and the Crypto-Asset Reporting Framework (CARF), whilst also seeking feedback on domestic reporting. The consultation focusses on practical implications, such as the adoption of an equivalent domestic regime that involves reporting on UK resident taxpayers by UK service providers; as well as proposed revisions to the penalty framework, to transition to a ‘per-account’ penalty model akin to the Digital Platforms information implementation.
PISCES Consultation
A significant consultation concerning the development of the Private Intermittent Securities and Capital Exchange System (PISCES), a new platform creating liquidity windows for private companies to trade at pre-determined intervals. Its primary objective is to close the gap between private companies and the UK public markets, thereby supporting prospective UK IPOs with a bespoke regulatory regime, providing better protection to investors than unregulated bilateral trading arrangements.
RIF Consultation
The UK government's confirmation of the Reserved Investor Fund (RIF) – set to be established in the Spring 2024 Finance Bill – signals a pivotal step in meeting the needs of professional and institutional investors. The RIF is anticipated to serve as an effective platform for holding UK real estate, however, the government has stated that the fund will have the flexibility to venture into various asset classes beyond real estate, provided it adheres to one of three restricted regimes: 1.) a minimum of 75% of the RIF's asset value is tied to UK property; 2.) the RIF's sole investors are exempt from capital gains except by reason of residence (e.g., certain pension funds); and 3.) the RIF refrains from direct investment in any UK property.
Additionally, RIFs will have flexibility to invest in Qualifying Asset Holding Companies (QAHCs) and Real Estate Investment Trusts (REITs). The government has confirmed a Stamp Duty Land Tax (SDLT) seeding relief, however there is no proposed VAT exemption or zero rating for management of a RIF. Despite lacking specific VAT exemptions, RIFs aim to provide a cost-efficient, regulatory compliant investment avenue for professionals, enhancing the accessibility and efficiency of the UK investment landscape.
UK ISA
A new Individual Savings Account (ISA) has been proposed, introducing an extra £5,000 allowance for investment in UK listed equities, with the aim of including funds, bonds, and gilts alongside UK equities within the UK ISA framework. Additionally, emphasis is placed on the government's commitment to digitising the ISA reporting system, prompting ISA managers to explore the feasibility of promptly integrating the UK ISA alongside these technological advancements.
Abolishment of ‘Non-Dom’ regime
The UK government has announced the abolition of the Non-Domiciled (Non-Dom) tax regime, effective 6 April 2025. This change impacts individuals who have been able to favourable tax treatment on foreign income and gains. Under the new legislation, Non-Dom individuals will be subject to UK tax on worldwide income and gains once they have been a UK resident for seven of the past nine years.
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