Britain closes expat tax loophole

 

Conal WalshSunday June 5, 2005The ObserverThe Inland Revenue has closed a loophole that has allowed thousands of wealthy Britons to avoidpaying capital gains tax.The measure is part of Chancellor Gordon Brown's crackdown on tax avoidance and targets many Cityinvestors who have achieved 'temporary non-resident' status by living in certain European countries.Treasury officials hope that their action, contained in the small print of the new Finance Bill,will be worth up to £100 million for the Revenue. 'It's a very clear signal that if you make acapital gain in this country, you're going to have to pay tax on it,' said John Whiting, a taxpartner at PricewaterhouseCoopers.Because of bilateral treaties, Britain has agreed with Belgium, Portugal and Austria, UK nationalsliving in those countries have been able to claim 'non-resident' status just one year after leavingthe UK. This enabled them to avoid paying capital gains tax to the Exchequer. Elsewhere, expatBritons have to spend five years abroad before qualifying for this privilege.Closing this loophole is just one feature of the Finance Bill's anti-avoidance effort, which hasattracted criticism from multinational companies. It also contains measures likely to increase thetax bills of insurers and venture capital firms.Guardian Unlimited © Guardian Newspapers Limited 2005http://observer.guardian.co.uk/business/story/0,6903,1499280,00.html