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Tax Law Changes Impacting UK Taxes

The proposed changes to UK tax legislation aim to make the tax system more equitable in several areas: 1. Capital gains tax modifications provide couples going through separation or divorce more flexibility and time to transfer assets between each other with no tax implications. 2. The multinational top-up tax targets multinational corporations' overseas profits above a 15% tax rate. It could impact individuals through lower jobs and investment. 3. Changes to the dormant assets scheme ensure tax neutrality for pension assets reclaimed from the program or inherited, while clarifying tax rules and reducing administration for pension organizations and beneficiaries.

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40 views2 pages

Tax Law Changes Impacting UK Taxes

The proposed changes to UK tax legislation aim to make the tax system more equitable in several areas: 1. Capital gains tax modifications provide couples going through separation or divorce more flexibility and time to transfer assets between each other with no tax implications. 2. The multinational top-up tax targets multinational corporations' overseas profits above a 15% tax rate. It could impact individuals through lower jobs and investment. 3. Changes to the dormant assets scheme ensure tax neutrality for pension assets reclaimed from the program or inherited, while clarifying tax rules and reducing administration for pension organizations and beneficiaries.

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mshafkan7
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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CHAGES IN TAX LEGISLATION AND HOW THEY AFFECT INDIVIDUALS AND BUSINESSES

1. Capital gains tax.

The proposed modifications to Capital Gains Tax (CGT) laws aim to make the rules more equitable for
couples splitting or divorcing. Couples currently have three years from the year they ceased living
together to make no gain or no loss transfers. Transferred assets as part of a legal divorce agreement
are eligible for no gain or no loss treatment. The policy change, advocated by the Office of Tax
Simplification, will take effect on or after April 6, 2023. The modifications are intended to reduce
possible tax liabilities following divorce or separation while ensuring tax fairness and uniformity.

The proposed amendments to Capital Gains Tax (CGT) legislation in the United Kingdom aim to make the
system more equitable and supportive of couples and families going through separation or divorce.
These include a longer "No Gain or No Loss" window, divorce agreement exclusions, Private Residence
Relief (PRR), and the transfer of profits. These reforms provide couples more time and flexibility,
minimize possible tax obligations, ease financial transitions, and safeguard household wealth. Although
legal service providers may suffer one-time charges, civil society groups will not be impacted (Anon.,
2022).

2. Corporate tax (multinational top up tax)

To tackle profit shifting and aggressive tax planning by multinational corporations, the UK government
enacted the multinational top-up tax (MTT). The tax is computed by deducting the effective tax rate
from 15% and applying it to non-UK subsidiary profits. It applies to multinational corporations having
subsidiaries in non-UK countries and earnings of less than 15%. The tax is applicable to responsible
members of a qualified multinational organization with worldwide annual revenues exceeding 750
million euros in at least two accounting periods beginning after December 31, 2023.

In the United Kingdom, the Multinational Top-Up Tax (MTT) targets multinational corporations and their
earnings, possibly affecting individuals indirectly through lower investment and job losses. Businesses
may pass on compliance costs to customers, reducing purchasing power. The MTT provides additional
cash to the UK government, which may help public services. However, some claim that it discriminates
against major international corporations, potentially harming employees (Anon., 2022).

3. Inheritance tax (Dormant assets)

The Dormant Assets Scheme's handling of pension assets under Income Tax and Inheritance Tax has
changed. The Finance Act of 2004 will add a new section 274ZB that will regard payments from
approved reclaim funds as if they were made straight from the original pension asset. This ensures tax
neutrality for recipients while also making the procedure easier for pension organizations and
beneficiaries. In addition, a new section 159A of the Inheritance Tax Act 1984 will be created to ensure
that if a pension asset is moved to an approved reclaim fund but the owner dies before claiming it, they
would still be recognized as holding the original asset for Inheritance Tax purposes.
The Dormant Assets program Law in the United Kingdom proposes to broaden the program, allowing
dormant assets from diverse industries to be utilized for public good while safeguarding the right of the
original owner to reclaim them. The law ensures fiscal neutrality for recovered pension assets as well as
inheritance tax protection, clarifies the tax classification of reclaimed assets, and reduces administrative
requirements on pension organizations and beneficiaries. Individuals that qualify for the system, want to
recover assets without incurring additional tax responsibilities, or inherit unclaimed assets profit from it.
The bill preserves tax neutrality and transparency while having little economic impact (Anon., 2022).

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