As the dust settles following the long-awaited result from the EU referendum and with 52% of those who voted choosing to leave the EU, Britain will now go it alone from the rest of Europe. But what does this mean for people in the UK paying tax, both now and in the future? How will it affect your ability to plan effectively for longer term stability?
Inbound and outbound
There are a few areas relating to personal taxes that are likely to change following Brexit, including IR35, Inheritance Tax (IHT) and taxes associated with Trusts, self-assessment and any residential property.
Taxes such as these are governed by the European Courts of Justice, so leaving the EU means that the UK could no longer be bound by those rules. Also, during the process of leaving the EU, there are likely to be decisions made regarding immigration and how inbound investment will be allowed into Britain as an independent state. Previous Budgets have focused on increasing the tax take from High Net Worth individuals planning to make the UK their home for the long term. This group may find itself under even greater pressure in the UK if EU countries see an opportunity to repatriate some of its nationals’ wealth.
Inland and overseas
Individuals who own property in other EU states may find that they are no longer protected from various tax and social charges that are imposed by some EU countries. It remains to be seen as to whether or not Britain will be able to negotiate for this protection to continue.
Despite leaving the EU, the UK could be forced to continue to comply with State aid requirements if it joins the EEA. It means that there could be more flexibility to invest in the UK without breaching those restrictions, whilst offering a further incentive to those choosing to invest here. What’s more, existing EU State aid restrictions could help secure the UK more inbound investment, but this continues to be debated.
State aid also prevented double taxation in treaties agreed by the UK and other EU countries and we could see those disappearing if Britain fails to join the EEA. There could also be implications for those delaying taking dividends – perhaps even an overall increase in the rate of tax.
For now, it is a waiting game to see how the new rules and regulations will pan out. In the meantime, if you would like further information about how a change in the rules surrounding taxes may affect you, either personally or for your business, then why not contact Wilkins Kennedy to see how we can help?