The Finance Bill 2012 included the proposed legislation on
business investment relief for remitted foreign income and gains.
Under pre-6 April 2012 rules, remittance basis taxpayers are liable
to UK tax on any foreign income or capital gains which they remit
to the UK, irrespective of the purpose for which the income and
gains are used.
The relief is a welcome initiative under which UK resident
non-domiciled persons will be able to remit overseas income and
gains to the UK tax-free in respect of certain qualifying business
investments in the UK, including in companies in which they or
their associates are involved.
In order to qualify for the business investment relief the
following main conditions must be met:
the investment must be in a qualifying company (the 'target
company') which meets the eligibility conditions
the investment may be in the form of shares or loans
the investment must be made within 45 days of the foreign
income or gains being brought to the UK
no benefit can be received by a relevant person, attributable
to the investment
a claim is made on the self-assessment tax return for the year
in which the investment is made
on disposal of the investment the proceeds of sale up to the
amount of the investment must be taken offshore or reinvested in
another qualifying investment within 45 days.
There is no constraint on the amount that can be brought to the
UK and on which business investment relief is claimed.
Business investment will also potentially attract other existing
tax reliefs, provided the qualifying conditions for these reliefs
are met, such as:
Enterprise Investment Scheme (EIS) relief
Venture Capital Trust relief
business property relief
the new Seed EIS relief.
The business investment relief is potentially very valuable
commercially in allowing people to utilise offshore resources which
have previously been ring-fenced from remittance.
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