Palladium Newsletter - March 2011

Dear Clients,

Welcome to our March newsletter in which we focus on the budget announcements made on March 23rd and how we believe it will make the UK an even more attractive place to live for the international wealthy and from which to structure significant family assets and wealth. Most importantly, we would like to confirm that in spite of the devastating earthquake in Christchurch, our New Zealand team is safe and back to working hard while its services continue to blossom. Tribute must be paid to the phlegmatic manner in which they and their fellow South Islanders have picked themselves up and regrouped.

Read on to find out more... This month George Osborne, the chancellor of the exchequer, announced some interesting tax planning perks in spite of the widespread spending and budget cuts presaged in the Conservative party’s election campaign. Of particular note is that the rate of taxation for large corporations – with a turnover of £1.5 million and above – will be reduced from 28% to 26% on April 1 and then to 23% by 2014.

This will make the UK corporate tax rate one of the lowest of any major economy. Further, small company profit rates will be reduced to 20% (profits up to £300,000). Underpinning these changes is the retention of the ‘non-dom’ tax regime and exemption for ‘non-dom’, UK residents on income or capital not remitted to the UK. ‘Non-doms’ pay no tax to benefit from this beneficial exemption for the first 7 out of 9 years they live in the UK and, while the charge is higher at £50,000 a year, long-term ‘non-dom’ UK residents may still benefit from the regime even having lived in the UK for 12 years or more. Further, from April 2012, ‘non-doms’ will be able to remit offshore income and capital tax-free to the UK – provided it is invested in UK business.

As an adjunct to the above, the UK is about to relax residence rules for the wealthy international elite. The new laws, which take effect in April, will allow people who invest at least £5 million to settle (‘indefinite leave to remain’) in Britain after only three years. Those who invest at least £10 million will be able to settle after two years. Normally, people must live in the UK lawfully for five years to attain settlement.

The UK’s immigration minister Damian Green also announced a new visa which will allow an investor or entrepreneur with £50,000 of funding from a reputable organisation in a "high potential" business to come to the UK. The usual entrepreneur visa requires that an applicant already has £200,000 available to invest in the UK.

This smacks more of Singapore than the highly taxed and burdensome rules of settling in the EU and is most welcome. Given the current upheaval in the Middle East, we expect London in particular to benefit from this new immigration regime.

Furthermore, this year the UK Government confirmed that changes to these rules will make the UK an ideal place for a holding company- not only will HMRC not tax UK holding companies on profits made by its non-UK subsidiaries, but also, those subsidiaries may even use their expenses to reduce holding companies’ taxable profits.

As of April 1st, and further to our main feature in our January newsletter (on our website for those who wish to revisit this subject) we look forward to establishing LTCs for a variety of client activities. New Zealand will provide an excellent, well regulated hub for international and tax efficient business in the coming decades, exploiting its unparalleled reputation for honesty and stability and as an OECD and FATF country. Our prediction is that in the near future, NZ LTCs may be the International Business Company of choice as the unwarranted and immoderate clamp down on tax havens gathers pace.

Please visit us at www.palladiumtrustservices.net or contact me directly at stephen@palladiumtrustservices.net if you would like more information on what Palladium can do for you.

Until next month,

Stephen

Treatment of offshore trusts by family courts:
http://www.mondaq.com/article.asp?articleid=123972

Swiss banker will stick to banking secrecy ethos – even where squaring up to the might of the US?:
http://mail-step.org/re?l=5ukfx3I1o5oco8I1b

Russia- Switzerland tie up a tax and administrative cooperation deal:
http://www.news.admin.ch/message/index.html?lang=en&msg-id=37886

Fresh wave of pressure from US on the Swiss:
http://www.swissinfo.ch/eng/business/US_tax_probe_tightens_noose_on_Swiss_banks.html?cid=29683948

Jersey and Isle of Man to keep -0-10’ rule:
http://www.tax-news.com/news/Jersey_IOM_To_Keep_ZeroTen____47821.html

80% of listed Spanish companies use of tax havens:
http://www.caymannewsservice.com/business/2011/03/04/report80-spanish-firms-operate-tax-havens

Survey of the variety (!) and regional breakdown UK’s millionaire’s from Barclays:
http://www.barclayswealth.com/Images/2011-UK-Wealth-Map.pdf

European Parliament threatening sanctions against banks operating out of ‘tax havens’:
http://www.caymannewsservice.com/business/2011/03/11/euro-parliament-threatens-banks-using-tax-havens

Barbados steps up a gear in establishing its own financial service regulator:
http://www.caribbeanpressreleases.com/articles/8146/1/BARBADOS-Government-To-Regulate-Financial-Services-Sector-/Page1.html

On the plus side: EU set to reduce red tape for companies’ EU-wide filing obligations:
http://europa.eu/rapid/pressReleasesAction.do?reference=IP/11/319

Non-dom levy increased from April 2012 – sigh of relief or more to come?:
http://www.stepjournal.org/news/news/secondary_news/higher_annual_levy_on_uk_non-1.aspx