UK Autumn Budget 2021

Offshore perspective

Whilst there were plenty of new tax measures announced by HM Revenue & Customs, we think there are a couple that could potentially have a material impact on clients of the local financial services industry:

Residential Property Development Tax from April 2022

This new tax was flagged in May.  The major new announcement in the Autumn Budget is that the rate will be 4%.   This measure is aimed at the big UK residential property developers – i.e. businesses with taxable profits from UK residential property development activity of greater than £25m – with the stated intention of collecting £2billion extra tax over the next 10 years or so to seed a fund to support cladding remediation work. For those companies affected, residential property development profits will be subject to corporation tax at 23% from April 2022 and 29% from April 2023. Purpose-built student accommodation is expected to be out of scope of this new 4% levy.  

Qualifying Asset Holding Company regime from April 2022

Again, this is not strictly a new announcement: the UK government started a consultation process on this concept last year.  This is essentially a UK company that from April 2022 will enjoy certain tax privileges such as exemption from capital gains tax in certain situations, exclusion of overseas property profits that have suffered overseas tax, relaxed interest relief rules etc. It is aimed at the fund sector since, to qualify, the company needs to be at least 70% owned by diversely-owned funds and/or institutional investors. On that basis, this new SPV is likely to be more of a challenge to the likes of Dublin and Luxembourg than Jersey which specialises more in closely-held fund vehicles. 

A detailed analysis of yesterday’s Budget announcements can be found at Autumn Budget 2021 - BDO