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Spring Budget 2021_individuals
Read time: 6 minutes
Last updated: 3 Mar 2021
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Spring Budget 2021: Considerations for Americans in the UK

Although there were no changes to Income Tax, National Insurance or Inheritance Tax, or even the anticipated Capital Gains Tax rates, the Chancellor did announce a few that may affect Americans in the UK. 
Capital Gains Tax

As ever, the international tax system remains complex, and both sides of the Atlantic must be considered. 

Capital Gains Tax

We were anticipating changes to the Capital Gains Tax (CGT) rates due to the Office of Tax Simplification report from last year, so it was good news to hear that the regime remains unchanged going into the 2021/22 UK tax year. The CGT rate is currently 20% (28% for disposal of residential property or carried interest). The annual capital gains annual exempt amount of £12,300 is also to be kept in place for tax years 2021/22 to 2025/26.  We expect this may be revisited in the coming years so you should keep an eye out for  changes to the capital gains tax rates in both jurisdictions  as part of your 2021 end of year tax planning.

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Martin Scullion

+44 (0)20 7556 1207
scullionm@buzzacott.co.uk
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As ever, the international tax system remains complex, and both sides of the Atlantic must be considered. 

Capital Gains Tax

We were anticipating changes to the Capital Gains Tax (CGT) rates due to the Office of Tax Simplification report from last year, so it was good news to hear that the regime remains unchanged going into the 2021/22 UK tax year. The CGT rate is currently 20% (28% for disposal of residential property or carried interest). The annual capital gains annual exempt amount of £12,300 is also to be kept in place for tax years 2021/22 to 2025/26.  We expect this may be revisited in the coming years so you should keep an eye out for  changes to the capital gains tax rates in both jurisdictions  as part of your 2021 end of year tax planning.

American owners of UK corporations

American owners of UK corporations

Since 2018, there has been a potential Global Intangible Low Taxed Income (GILTI) consideration for certain American owners of foreign companies, which is an additional tax on US owners of foreign companies. There is scope in the US to make a “check the box” election or a s962 election to mitigate the GILTI tax.

However, with the UK corporation tax rate set to increase to 25% from 5 April 2023 there could be more scope for making use of the GILTI High-Tax Exclusion to exempt the profits from this additional tax. There will be a small profits rate of 19% (profits of up to £50,000) and a tapered rate for profits in between £50,000 and £250,000, so there may still be a need for “check the box” elections or s962 election in certain cases depending on the individual facts and circumstances.

Inheritance Tax

Inheritance Tax

The Inheritance Tax nil rate band threshold remains at £325,000 for 2021/22 to 2025/26. With the threat of the US Estate tax threshold ($11.7m) decreasing under the Biden administration, Americans in the UK who are not UK domiciled and not UK deemed domiciled yet, should consider making use of the differences in the US and UK Estate Tax/ IHT thresholds to reduce their tax exposure.

Attracting global talent

Attracting global talent

Chancellor Sunak also announced reforms to the immigration system to make it easier to attract top global talent (including Americans) to help boost investment in the UK. This includes introducing an elite points-based route to attract the brightest and the best to the UK to maintain our status as a leading international hub for emerging and disruptive technologies. 

A “scale-up” stream will be created within the new points based route that will allow those with a job offer at the required skills level from a recognised UK “scale-up” to qualify for a fast track visa. The Chancellor also announced reforms to the Global Talent route, a review of the Innovator route, and to launch by Spring 2022, a single sponsored Global Business Mobility route for overseas businesses seeking to establish a presence here or transfer staff to the UK.

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For more information on the above or advice tailored to you, please fill out the form below and one of our dual qualified US/UK experts will be in touch to discuss your requirements. 

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